Equipment: 500000

Life:10 years
Salvage Value:50000
Machine:300000
:8 years
:20000
Interest Rate:10%
For Year: 5 years

Annual Worth Method

Annual Revenue 800000

Depreciation
Equipment: 73708.866
Machine : 45863.9946
Taxes : 27720
Maintenance: 5000
Labor & Salaries : 60000
Utilities : 24000
Interest On Capital:
(0.281392)(2003280)= 563706.97

Total Annual Cost: 799999.1306

Excess: 0.8694
Annual Revenue: 800000
Annual Costs:
Depreciation:
Equipment:
500000−500000
d= (1.1)5−1 =73706.866
0.1

Machine:

d= 300000−20000
¿¿¿
=45863.2946

Labor and Salaries 60000

Maintenance 5000
Utilities 24000
Taxes 27720
Total Annual Cost 236292.1606
Net Annual Profit 563707.8394

563707.8394
Rate of Return : 2003280
x100%

ROR=28.1392%>10%
BY THE FUTURE WORTH METHOD

FW of cash inflows = ₱50,000 + ₱800,000 (F/A, 10%, 5)

= ₱50,000 + 800,000 (6.1051)
= ₱4,934,080

 Labor and salaries = ₱60, 000

 Maintenance = ₱5,000
 Utilities = ₱24,000
 Taxes = ₱27,720

FW of cash outflows = ₱116,720 (F/A, 10%, 5) + 500,000 (F/P, 10%, 5)

= ₱116,720 (6.1051) + 500,000 (1.61051)
= ₱1,517,842.272