Illustrate if the company has the cash

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Reference no: EM1354196

A firm is charged 150php per ton for hauling its raw materials by trucking company. Forty tons per day are hauled for 300 days a year. It is desired to install a railway system which would bring down the cost of hauling to 6.60php per ton. Maintenance cost of this is 12000php per month. Tax is 1%. Average rate of earning is 20%.

a.) Illustrate if the company has the cash necessary for the installation would you recommend the change?

b.) Illustrate if the company has to float 5,000,000php worth of noncallable bonds at 15% that will mature in 10 yrs. to have the capital for the project, would you recommend the change?

Reference no: EM1354196

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