An investment of P270,270 isneeded for a Korean Mart that willproduce a uniform annual revenue.This Korean Mart is operating daily(assuming 30 days a month) for 5years and then have a salvage valueof 10% of the investment. Out-of-pocket costs for operation andmaintenance will be P81,096 peryear. Taxes and insurance will be 4%of the first cost per year. Thecompany expects capital to earn notless than 25% before income taxes.Using RoR method, how much shouldbe their minimum daily revenue forthis investment to bedesirable(break-even)?

Given, Investment : P270,270Operating daily for 5 yearsSalvage Value : 10% of InvestmentOperation…

An investment of P270,270 is needed for a Korean Mart that will produce a uniform annual revenue. This Korean Mart is operating daily (assuming 30 days a month) for 5 years and then have a salvage value

An investment of P270,270 is needed for a Korean Mart that will produce a uniform annual revenue. This Korean Mart is operating daily (assuming 30 days a month) for 5 years and then have a salvage value

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

An investment of P270,270 is
needed for a Korean Mart that will
produce a uniform annual revenue.
This Korean Mart is operating daily
(assuming 30 days a month) for 5
years and then have a salvage value
of 10% of the investment. Out-of-
pocket costs for operation and
maintenance will be P81,096 per
year. Taxes and insurance will be 4%
of the first cost per year. The
company expects capital to earn not
less than 25% before income taxes.
Using RoR method, how much should
be their minimum daily revenue for
this investment to be
desirable(break-even)?

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