A man wants to have a building to be used as a university, and he has...
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A man wants to have a building to be used as a university, and he has two options. The first one is to build it with a first cost of P10M and a salvage of P 450,000 at the end of 30 years. Its annual operating cost is P0.5M, while the repair and maintenance cost is PIM for every 10 years and thereafter while the replacement cost is P IM for every 15 years and thereafter. The second option is to rent a building with the following pattern of annual rental cost shown in the table every 5 years and thereafter. If the interest is 24% cpd. weekly, what is the Capitalized Cost of the 2nd Option? Year Rental Cost 4270725 2 4518946 3 5626426 4 5M 5 6M A man wants to have a building to be used as a university, and he has two options. The first one is to build it with a first cost of P10M and a salvage of P 450,000 at the end of 30 years. Its annual operating cost is P0.5M, while the repair and maintenance cost is PIM for every 10 years and thereafter while the replacement cost is P IM for every 15 years and thereafter. The second option is to rent a building with the following pattern of annual rental cost shown in the table every 5 years and thereafter. If the interest is 24% cpd. weekly, what is the Capitalized Cost of the 2nd Option? Year Rental Cost 4270725 2 4518946 3 5626426 4 5M 5 6M
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To calculate the Capitalized Cost of the second option we need to determine the present value of the ... View the full answer
Related Book For
Engineering Economic Analysis
ISBN: 9780195168075
9th Edition
Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle
Posted Date:
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