A man plans to invest P500,000.00 in an auto washing machine with the following data:Washing capacity- 12 cars/hr at 8hrs operation/day for 6days a week and 50 weeks/yearCar wash charge - P25/carManual labor cost (2 workers) - P25/hr per worker plus a paid vacation benefits of 2 weeks per yearMaintenance cost - P8500.00/monthDesired rate of return on the capital - 20%Presently your father is earning P25,000.00/month as a regular employee and wants to concentrate on this business and want to recover his investment in 5 years.Using ROR and AW Method of economy studies, should your father proceed with the investment?

Given that, Investment =P500,000 Washing capacity- 12 cars/hr at 8hrs operation/day for 6days a…

Answered: A man plans to invest P500,000.00 in an…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A man plans to invest P500,000.00 in an auto washing machine with the following data:

Washing capacity- 12 cars/hr at 8hrs operation/day for 6days a week and 50 weeks/year
Car wash charge - P25/car
Manual labor cost (2 workers) - P25/hr per worker plus a paid vacation benefits of 2 weeks per year
Maintenance cost - P8500.00/month
Desired rate of return on the capital - 20%

Presently your father is earning P25,000.00/month as a regular employee and wants to concentrate on this business and want to recover his investment in 5 years.

Using ROR and AW Method of economy studies, should your father proceed with the investment?

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