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An oil company is being offered a special coating for the underground gasoline tank installation in its service stations which will increase the life of the tank from the usual 10 years to 15 years. The cost of the special coating will increase the cost if the P40,000-tank to P58,000. Cost of installation for either of tanks is P24,000. If salvage value of for both is zero, and interest rate is 26%, would you recommend the use of the special coating?
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- An oil company is being offered a special coating for the underground gasoline tank installation in its service stations which will increase the life of the tank from the usual 10 years to 15 years. The cost of the special coating will increase the cost if the P40,000- tank to P58,000. Cost of installation for either of tanks is P24,000. If salvage value of for both is zero, and interest rate is 26%, would you recommend the use of the special coating? Please solve using "The rate of return on additional investment" and indicate cash flow diagram.A company is being offered a special coating for the gasoline underground tank installation in its service stations which will increase the life of the tank from the usual 10 years to 15 years. The cost of the special coating will increase the cost of the 30,000-tank to 48,000. Cost of installation for either of the tanks is P20,000. If the salvage value for both is zero, and interest rate is 23%, would you recommend the use of the special coating?A company is being offered a special coating for the gasoline underground tank installation in its service stations which will increase the life of the tank from the usual 10 years to 15 years. The cost of the special coating will increase the cost of the 30,000-tank to 48,000. Cost of installation for either of the tanks is P20,000. If the salvage value for both is zero, and interest rate is 23%, would you recommend the use of the special coating? The answer js [ Select ] [ Select ] Special coating must be used Special coating must not be used
- Machine X has an initial cost of P 45,000, annual maintenance of P 2,250 per year, an no salvage value at the end of its four-year useful life. Machine Y costs P 90,000. The first year there is no maintenance cost. The second year, maintenance is P450, and increases P450 per year in the subsequent years. The machine has an anticipated value P22,500 salvage value at the end of its 12-year useful life.If interest is 8%, what is the present worth of cost of 12 years of Machine X? a) P157,357 b) P140,174 c) P52,452 d) P 119,345An 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)?A company in Batangas is planning to buy a new gantry crane that has a capacity of 50 tons. In the market, there are four available cranes offered by different well-known companies. The first equipment is a portable/mobile gantry crane with a cost of P2,400,000 and an installation cost of P50,000. During its life of 5 years, the cost of power and labor is P130,000 and P280,000 respectively. Maintenance should be followed as well and must be done on its scheduled program. The cost of maintenance per year is P116,000. The second equipment is a double girder gantry crane with a cost of P3,000,000 and an installation cost of P40,000. During its life of 5 years. the cost of power and labor is P136,000 and P190,000 respectively. The cost of maintenance per year is P93.000. The third equipment is an electric trolley gantry crane with a cost of P4.960,000 and an installation cost of P55,000. During its life of 5 years, the cost of power and labor is P240,000 and P130,000 respectively. The cost…
- A company in Batangas is planning to buy a new gantry crane that has a capacity of 50 tons. In the market, there are four available cranes offered by different well-known companies. The first equipment is a portable/mobile gantry crane with a cost of P2,400,000 and an installation cost of P50,000. During its life of 5 years, the cost of power and labor is P130,000 and P280,000 respectively. Maintenance should be followed as well and must be done on its scheduled program. The cost of maintenance per year is P116,000. The second equipment is a double girder gantry crane with a cost of P3,000,000 and an installation cost of P40,000. During its life of 5 years. the cost of power and labor is P136,000 and P190,000 respectively. The cost of maintenance per year is P93.000. The third equipment is an electric trolley gantry crane with a cost of P4.960,000 and an installation cost of P55,000. During its life of 5 years, the cost of power and labor is P240,000 and P130,000 respectively. The cost…A plant to provide the company’s present needs can be constructed for P2,800,000 with annual operating disbursements of P600,000. It is expected that at the end of 5 years the production requirements could be doubled, which will necessitate the addition of an extension costing P2,400,000. The disbursement after 5 years will likewise double. A plan to provide the entire expected capacity can be constructed for P4,000,000 and its operating disbursement will be P640,000 when operating on half capacity (for the first 5 years) and P900,000 on full capacity. The plants are predicted to have indeterminately long life. The required rate of return is 20%. What would you recommend? Use Present Worth Cost MethodShow complete manual solutionan engineer knows that the supplier of their set-5100 laser surface metrology system used on one of their lines superseded their 5100 model with the 5105. the new model has a net cost of $420000. adding the new 5105 model to the production line would in decrease scrap rate estimated to save 630000 in the first year. the rate of return for on the set-5105 purchase is 13% MEMD IS 15% what is the opportunity cost
- CB Electronix must buy a piece of equipment to place electronic components on the printed circuit boards it assembles. The proposed equipment has a 10-year life with no scrap value. The supplier has given CB several purchase alternatives. The first is to purchase the equipment for $950,000. The second is to pay for the equipment in 10 equal installments of $125,000 each, starting one year from now. The third is to pay $210,000 now and S85,000 at the end of each year for the next 10 years. Complete parts (a) and (b) below. a. Which alternative should CB choose if its MARR is 11 percent per year? Use an IRR comparison approach. Considering the alternatives in the order of lowest first cost, the best option is the which has an incremental rate of return of %. (Type an integer or decimal rounded to two decimal places as needed. Use an approximate ERR if the IRR cannot be used.)The monthly demand for ice cans being manufactured by Mr. Cruz is 3,200 pieces. Witha manually operated guillotine, the unit cutting cost is P25.00. An electrically operatedhydraulic guillotine was offered to Mr. Cruz at a price of P275,000 and which will cut by30% the unit cutting cost. Disregarding the cost of money, how many months will Mr. Cruzbe able to recover the cost of the machine if he decides to buy now?A fabrication company engaged in production of a motor part has a production capacity of 700, 000 pieces per year. But, it is just operating at 62% of its full capacity due to unavailability to finance the importation of their materials. The company has an annual income of P 430, 000.00, annual fixed cost are P 190, 000.00 and variable costs are P 0.348 per unit. How many productions of parts must be produced for break-even point? Given:Required:Solution: