Question: Solve using Rate of Return Method A firm is considering purchasing equipment that will reduce costs by Php 40,000. The equipment costs Php300,000 and has

Solve using Rate of Return Method A firm is considering purchasing

Solve using Rate of Return Method A firm is considering purchasing equipment that will reduce costs by Php 40,000. The equipment costs Php300,000 and has a salvage value of Php50,000 and a life of 7 years. The annual maintenance cost is Php6,000. While not used by the firm, the equipment can be rented to others to generate an income of Php10,000 per year. If money can be invested for an 8% return, is the firm justified in buying the equipment

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