Engineering Board Exam Reviewer · Perpetuity and Capitalized Cost · medium
Equipment costs P400,000, must be replaced every 10 years with a salvage value of P40,000, and has annual operating costs of P25,000. Find its capitalized cost at 9% interest.
- P677,777.78
- P1,301,058.14
- P701,473.01
- P941,058.14
Answer
D. P941,058.14
Solution
CC=C+(C-S)(A/F,i,n)/i+ Oi=400,000+ 360,000(0.065820)0.09+ 25,0000.09=P941,058.14.
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