What is annual cost for la union using present worth cost

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In building their plant, the officers of the DY Company had the choice between alternatives: First alternative is to build in La Union where the plant would cost P2,000,000. Labor would cost annually P120,000 and annual overhead would be P50,000. Taxes and insurance would total 5% if the first cost of the plant. The second alternative would be to build in Bulacan a plant costing P2,250,000. Labor would cost annually P100,000 and overhead would be P55,000. Taxes and insurance would be 3% of the first cost. The cost of raw materials would be the same in neither plant. Capital must be recovered within 10 years and money is worth at least 20%,

Problem A. what is the rate of return on additional investment method? which site should the officers of the company choose?

Problem B. what is the annual cost for La Union using present worth cost method? which site should the officers of the company choose?

Problem C. what is the equivalent uniform annual cost for Bulacan? which site should the officers of the company choose

Reference no: EM132809807

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