Answer and draw the cashflow diagram A steam boiler is purchased on the basis of guaranteed performance. However, initial tests indicate that the operating cost will be P40, 000 more per year than guaranteed. If the expected life is 25 years and money is worth 10%, what deduction from the purchased price would compensate the buyer for the operating cost?

Answer and draw the cashflow diagram A steam boiler is purchased on the basis of guaranteed performance. However, initial tests indicate that the operating cost will be P40, 000 more per year than guaranteed. If the expected life is 25 years and money is worth 10%, what deduction from the purchased price would compensate the buyer for the operating cost?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

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A steam boiler is purchased on the basis ofguaranteed performance. However, initialtests indicate that the operating cost willbe P400 more per year than guaranteed. Ifthe expected life is 25 years and moneyworth 10%, what deduction from thepurchase price would compensate thebuyer for the additional operating cost?( WITH CASH FLOW DIAGRAM)
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