A mine costs P21M, and will last for 20years. Its plant has a salvage value ofPIM, at the end of the time. The mine will yield an equal dividend, if it issufficient to pay interest annually at the rate 6% on the original investmentand to accumulate a replacement fund, invested at 4%.SolutionD (FC) + (RC - SV)i=(1+i)"-1FC= 21Mr= 6% = 0.06SV= 1Mi= 4% = 0.04

Step 1:step 2 ; so after calculation we get the answer as 340.81

Answered: A mine costs P21M, and will last for…

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

Problem 1PS

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