Engineering Board Exam Reviewer · Perpetuity and Capitalized Cost · medium

A machine costs P300,000 and requires P15,000 annual maintenance forever. Find its capitalized cost at 10% interest.

  1. P450,000
  2. P400,000
  3. P500,000
  4. P350,000

Answer

A. P450,000

Solution

CC=300000+15000/0.10=300000+150000=P450,000.

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