An investment of P60,000 can be made in a project that will produce revenue of P29,000...

 

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An investment of P60,000 can be made in a project that will produce revenue of P29,000 each year for 5 years and then have a salvage value of P6,000. Out-of-pocket costs for operations and maintenance will be P12,000 per year. Taxes and insurance will be 2% of the first cost per year. The company expects capital to earn not less than 15% before taxes. Is this a desirable investment? (use sinking fund method)| An investment of P60,000 can be made in a project that will produce revenue of P29,000 each year for 5 years and then have a salvage value of P6,000. Out-of-pocket costs for operations and maintenance will be P12,000 per year. Taxes and insurance will be 2% of the first cost per year. The company expects capital to earn not less than 15% before taxes. Is this a desirable investment? (use sinking fund method)|