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RLC Manufacturing is planning to purchase a cutting equipment. Information are as follows:     Equipment 1 Equipment 2 First Cost P 12,000 P 18,000 Salvage Value P 600 P 2,000 Annual Operation P 3,200 P 2,500 Annual Maintenance P 1,200 P 1,000 Taxes & Insurance 3% 3% Life, years 10 15   Money is worth at least 16%. Which equipment should be selected? Use:     Annual Cost Method

RLC Manufacturing is planning to purchase a cutting equipment. Information are as follows:     Equipment 1 Equipment 2 First Cost P 12,000 P 18,000 Salvage Value P 600 P 2,000 Annual Operation P 3,200 P 2,500 Annual Maintenance P 1,200 P 1,000 Taxes & Insurance 3% 3% Life, years 10 15   Money is worth at least 16%. Which equipment should be selected? Use:     Annual Cost Method

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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RLC Manufacturing is planning to purchase a cutting equipment. Information are as follows:

 

 

Equipment 1

Equipment 2

First Cost

P 12,000

P 18,000

Salvage Value

P 600

P 2,000

Annual Operation

P 3,200

P 2,500

Annual Maintenance

P 1,200

P 1,000

Taxes & Insurance

3%

3%

Life, years

10

15

 

Money is worth at least 16%.

Which equipment should be selected?

Use:     Annual Cost Method

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