5. A company manufacturing acids, upon inspection of the roofing of the plant, found out that it is badly corroded from the acid, fumes and would need to be replaced. To try to get some more life out of the roofing, the company consulted a roofing coating contractor who presented the company with two options. The first option is a coating that will cost P20,000 which would extend the life of the roofing for 3 years from the date of application, and the second option will cost P30,000 and which would extend the life of the roofing for 5 years from the date of application. At what rate of return are the two investments equal? 6. A factory has just installed a boiler. It is expected that there will be no maintenance expenses until the end of the 11h year, when P400 will be spent on the boiler. P400 will be spent at the end of each successive year until the boiler is scrapped at the age of 35 years. What sum of money set aside at his time at 6% interest will take care of all maintenance expenses for the boiler? Draw the cash flow diagram based on your solution.

5. A company manufacturing acids, upon inspection of the roofing of the plant, found out that it is badly corroded from the acid, fumes and would need to be replaced. To try to get some more life out of the roofing, the company consulted a roofing coating contractor who presented the company with two options. The first option is a coating that will cost P20,000 which would extend the life of the roofing for 3 years from the date of application, and the second option will cost P30,000 and which would extend the life of the roofing for 5 years from the date of application. At what rate of return are the two investments equal? 6. A factory has just installed a boiler. It is expected that there will be no maintenance expenses until the end of the 11h year, when P400 will be spent on the boiler. P400 will be spent at the end of each successive year until the boiler is scrapped at the age of 35 years. What sum of money set aside at his time at 6% interest will take care of all maintenance expenses for the boiler? Draw the cash flow diagram based on your solution.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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