2. A company is considering two types of equipment for power plant. Type A will cost Php 200,000. , requires Php 32,000 per year for power, supplies and maintenance and Php 50,000. annually for labor. Type B will require an investment of Php 300,000 and require Php 24,000 annually for power, supplies and maintenance, but will cost only Php 32,000 per year for labor. Insurance and property taxes total 3% of first cost per year. Payroll taxes (salary tax)are 4% annually. Estimated life of each type of equipment is 10 years and capital is worth 15% before taxes. Which equipment should be purchased?

2. A company is considering two types of equipment for power plant. Type A will cost Php 200,000. , requires Php 32,000 per year for power, supplies and maintenance and Php 50,000. annually for labor. Type B will require an investment of Php 300,000 and require Php 24,000 annually for power, supplies and maintenance, but will cost only Php 32,000 per year for labor. Insurance and property taxes total 3% of first cost per year. Payroll taxes (salary tax)are 4% annually. Estimated life of each type of equipment is 10 years and capital is worth 15% before taxes. Which equipment should be purchased?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

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