An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs Php 18,000.00 each and will last 20 years. The company is presently using creosoted wooden poles which cost Php 12,000.00 per pole and will last 10 years. If money is worth 12%, which pole should be used? Assume annual taxes amount to 1% of first cost and zero salvage value in both cases.
An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs Php 18,000.00 each and will last 20 years. The company is presently using creosoted wooden poles which cost Php 12,000.00 per pole and will last 10 years. If money is worth 12%, which pole should be used? Assume annual taxes amount to 1% of first cost and zero salvage value in both cases.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs Php 18,000.00 each and will last 20 years. The company is presently using creosoted wooden poles which cost Php 12,000.00 per pole and will last 10 years. If money is worth 12%, which pole should be used? Assume annual taxes amount to 1% of first cost and zero salvage value in both cases.
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