The benefit cost ratio for a pest control program proposed by the Department of Agrarian Reform is reported to be 2.1. The person who prepared the report stated that he estimated the health benefits to be P400,000. A disbenefit of P25,000 per year were used in his calculation. He also stated that the costs for machinery, chemicals, maintenance, and labor were estimated at P150,000 annually, but he forgot to list the initial cost for transportation. If the initial cost was amortized over a 10-year period at 8% per year, what is the estimated initial cost?

The benefit cost ratio for a pest control program proposed by the Department of Agrarian Reform is reported to be 2.1. The person who prepared the report stated that he estimated the health benefits to be P400,000. A disbenefit of P25,000 per year were used in his calculation. He also stated that the costs for machinery, chemicals, maintenance, and labor were estimated at P150,000 annually, but he forgot to list the initial cost for transportation. If the initial cost was amortized over a 10-year period at 8% per year, what is the estimated initial cost?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 3.4CE

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