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    Edriel Jim Ello
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    The document discusses four cases involving the calculation of capitalized costs for different projects. Case 1 determines the capitalized cost of a structure with an initial investment of P1,500,000 and annual maintenance of P150,000 with 15% interest. Case 2 compares the capitalized costs of two heat exchangers with different initial costs, scrap values, and useful lives using a 9% interest rate. Case 3 analyzes two types of bridges based on their capitalized costs using data on initial costs, renewal costs, salvage values, maintenance, repairs, and life spans with a 10% interest rate. Case 4 compares the capitalized costs of two projects with differing first costs, annual operating costs, salvage values, and

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    The document discusses four cases involving the calculation of capitalized costs for different projects. Case 1 determines the capitalized cost of a structure with an initial investment of P1,500,000 and annual maintenance of P150,000 with 15% interest. Case 2 compares the capitalized costs of two heat exchangers with different initial costs, scrap values, and useful lives using a 9% interest rate. Case 3 analyzes two types of bridges based on their capitalized costs using data on initial costs, renewal costs, salvage values, maintenance, repairs, and life spans with a 10% interest rate. Case 4 compares the capitalized costs of two projects with differing first costs, annual operating costs, salvage values, and

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    © All Rights Reserved
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    15 views1 page

    Capitalized Cost

    Uploaded by

    Edriel Jim Ello
    The document discusses four cases involving the calculation of capitalized costs for different projects. Case 1 determines the capitalized cost of a structure with an initial investment of P1,500,000 and annual maintenance of P150,000 with 15% interest. Case 2 compares the capitalized costs of two heat exchangers with different initial costs, scrap values, and useful lives using a 9% interest rate. Case 3 analyzes two types of bridges based on their capitalized costs using data on initial costs, renewal costs, salvage values, maintenance, repairs, and life spans with a 10% interest rate. Case 4 compares the capitalized costs of two projects with differing first costs, annual operating costs, salvage values, and

    Copyright:

    © All Rights Reserved
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    CAPITALIZED COST

    Case 1:

    1. Determine the capitalized cost of a structure that requires an initial investment of


    P1,500,000 and an annual maitenance of P150,000. Interest is 15%. ANS. P2.5M

    Case 2:

    2. A heat exchanger is needed in a chemical process. If interest is 9% compounded


    annually, determine which of the following heat exchanger is cheaper by
    comparing the capitalized cost:
    a) Exchanger A costs P22,000 with a scrap value of P1,000 and a useful life of
    7 years;
    b) Exchanegr B costs P28,000 with a scrap value of P1,500 and a useful life of
    10 years.

    Case 3:

    3. A financial analysis of two types of bridges based on capitalized cost and on the
    following data is to be made:

    Bridge A Bridge B
    Initial Cost P200,000 P240,000
    Cost of Renewal P200,000 P240,000
    Salvage Value 0 P20,000
    Annual Maintenance P1,000 None
    Repairs every 5 years P10,000 P5,000
    Life 30 years 40 years

    4. Compare alternatives shown on the basis of their capitalized cost using an interest
    rate of 10% per year.

    Project A Project B
    First Costs, Php P150,000 P800,000
    Annual operating cost, Php P50,000 P12,000
    Salvage Value, Php P8,000 P1,000,000
    Life, years 5 years ∞

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