Engineering Board Exam Reviewer · Replacement Analysis · medium
A machine can be sold now for P60,000 or for P48,000 one year from now. Operating cost for the coming year is P15,000. At 10% interest, what is the marginal cost of keeping it one more year?
- P33,000
- P27,000
- P21,000
- P31,800
Answer
A. P33,000
Solution
Marginal cost = interest on market value + loss in market value + operating cost =0.10(60,000)+(60,000-48,000)+15,000=6,000+12,000+15,000=P33,000.
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