A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years. During its life an estimated maintenance cost of P 280, 000 will be spent each year. Taxes and insurance will be 5 % of the first cost. The project will yield a uniform annual revenue of P 1M. The company expects to earn 20% before income taxes. Compute the rate of return. Select one: a. 8.38% b. 6.54% c. 5.65% d. 7.12%

A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years. During its life an estimated maintenance cost of P 280, 000 will be spent each year. Taxes and insurance will be 5 % of the first cost. The project will yield a uniform annual revenue of P 1M. The company expects to earn 20% before income taxes. Compute the rate of return. Select one: a. 8.38% b. 6.54% c. 5.65% d. 7.12%

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Description: A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years. During its life an estimated maintenance cost of P 280, 000 will be spent each year. Taxes and insurance will be 5 % of the first cost. The p

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years. During its life an estimated maintenance cost of P 280, 000 will be spent each year. Taxes and insurance will be 5 % of the first cost. The project will yield a uniform annual revenue of P 1M. The company expects to earn 20% before income taxes. Compute the rate of return. Select one: a. 16.5% b. 18.4% c. 23.8% d. 21.3%
A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years. During its life an estimated maintenance cost of P 280, 000 will be spent each year. Taxes and insurance will be 5 % of the first cost. The project will yield a uniform annual revenue of P 1M. The company expects to earn 20% before income taxes. Compute the rate of return.
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A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years. During its life an estimated maintenance cost of P 280, 000 will be spent each year. Taxes and insurance will be 5 % of the first cost. The project will yield a uniform annual revenue of P 1M. The company expects to earn 20% before income taxes. Compute the annual worth of the investment.
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SHOW COMPLETE SOLUTION 4.A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years. During its life an estimated maintenance cost of P 280, 000 will be spent each year. Taxes and insurance will be 5 % of the first cost. The project will yield a uniform annual revenue of P 1M. The company expects to earn 20% before income taxes. Compute the pay out period.
SHOW COMPLETE SOLUTION 7.A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12 years. During its life an estimated maintenance cost of P 280, 000 will be spent each year. Taxes and insurance will be 5 % of the first cost. The project will yield a uniform annual revenue of P 1M. The company expects to earn 20% before income taxes. Compute the rate of return.
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