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Calculate for annual depreciation use sinking fund method

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Reference no: EM132772314

Problem 1: An investment of P60,000 can be made in depreciable assets that will produce revenues of P29,000 per year for 5 years. Annual cost for operations and maintenance will be P12,000 per year. Taxes and insurance will be 2% of the first cost. If the company expects capital
to earn not less than 15% before tax, is this a desirable investment. Use sinking fund method to calculate for annual depreciation. What is the % rate of return?

a. 10.5%
b. 11.5%
c. 13.5%
d. 17.5%

Reference no: EM132772314

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