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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:     a. Rate of Return Method Rate of Return Method Annual Cost Method NOTE: Show cashflow diagram.

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:     a. Rate of Return Method Rate of Return Method Annual Cost Method NOTE: Show cashflow diagram.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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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:     a. Rate of Return Method

  1. Rate of Return Method
  2. Annual Cost Method

NOTE: Show cashflow diagram.

 

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