A dam will have a first cost of P250,000,000, an annual maintenance cost of P1,250,000 and minor reconstruction costs of P518,546 every five years. At an interest rate of 0.09 per year, what is the capitalized cost of the dam in pesos?

A dam will have a first cost of P250,000,000, an annual maintenance cost of P1,250,000 and minor reconstruction costs of P518,546 every five years. At an interest rate of 0.09 per year, what is the capitalized cost of the dam in pesos?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 15EB: Project X costs $10,000 and will generate annual net cash inflows of $4,800 for five years. What is...

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

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