A taxi operator purchased a new unit with a down payment of P400 000.00 and monthly payments of P12 500.00 for the next three years. The unit is expected to be used for eight years and will be sold for P40 000.00 after that time. The estimated net monthly income from the unit (depreciation included) is P25 000.00 for the first five years and P22 000.00 for the last three years. Determine (a) the payback period; (b) the future worth of the investment for an interest rate of 18% compounded monthly. (ANSWER: 32 months, P2.077M)

A taxi operator purchased a new unit with a down payment of P400 000.00 and monthly payments of P12 500.00 for the next three years. The unit is expected to be used for eight years and will be sold for P40 000.00 after that time. The estimated net monthly income from the unit (depreciation included) is P25 000.00 for the first five years and P22 000.00 for the last three years. Determine (a) the payback period; (b) the future worth of the investment for an interest rate of 18% compounded monthly. (ANSWER: 32 months, P2.077M)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 1P

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