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Benefit Cost2

This document contains 10 word problems related to calculating capitalized costs, benefit-cost ratios, and rates of return on investments. The problems involve purchasing or maintaining assets over time and calculating present values using interest rates.

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66 views2 pages

Benefit Cost2

This document contains 10 word problems related to calculating capitalized costs, benefit-cost ratios, and rates of return on investments. The problems involve purchasing or maintaining assets over time and calculating present values using interest rates.

Uploaded by

Jsbebe jskdbsj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. An item is purchased for P200,000. Annual cost is P20,000.

Using 10%,what is the


capitalized cost of perpetual service?
a.P400,000 b.P450,000 c.P500,000 d.P550,000

2. A member of congress wants to know the capitalized cost of maintaining a proposed


national park. The annual maintenance cost is expected to be P1,000,000. At an interest
rate of 5 % per year, the capitalized cost of the maintenance would be closest to:
a.P20 M b.P30 M c.P40 M d.P50 M

3. A dam will have a first cost of P200M an annual maintenance cost of P1M and minor
reconstruction cost of P5M every 5 yrs. At an interest rate of 10% per year, the capitalized
cost of the dam is nearest to:
a.P218.129 M b.P208.921 M c.P281.219 M d.P228.912 M

4. A proposal is made to buy a machine for P100,000. The expected service life is 10 yrs
with zero salvage value. What is the capitalized cost if the machine is kept in service
indefinitely? The interest rate is 10%
a.P162,745.39 b.P262,547.87 c.P362,456.34 d.P562,234.23

5. A proposal is made to buy a machine for P100,000. The expected service life is 10 yrs
with zero salvage value. The capitalized cost is a P162, 745 and the maintenance of
P16,274.00. What is the interest rate?
a.29.7% b.15.9% c.20% d.25%

6. A large sewer system will cost P180,000 annually. There will be favorable consequence
to the general public of P520,000 annually, and adverse consequence to a small segment
of the public of P60,000 annually. What is the excess of benefits over cost?
a.P280,000 b.P290,000 c.P270,000 d.P260,000

7. A large sewer system will cost P180,000 annually. There will be favorable consequence
to the general public of P520,000 annually, and adverse consequence to a small segment
of the public of P60,000 annually. What is the benefit cost ratio?
a.2.56 b.3.56 c.4.56 d.5.56

8. A public works project has an initial cost of P2M, benefits with a present worth of P3M
and disbenefits with a present worth of P500,000.What is the benefits cost ratio?
a.1.25 b.2.25 c.3.25 d.4.25

9. A public works project has an initial cost of P2M, benefits with a present worth of P3M
and disbenefits with a present worth of P500,000.What is the excess of benefits over cost?
a.P500,000 b.P550,000 c.P600,000 d.P650,000
10. A businessman wishes to earn 10% on his capital after payment of taxes. If the income
from an available investment will be taxed at an average rate of 50%,what minimum rate of
return, before payment of taxes, must the investment offer to be justified?
a.20% b.30% c.40% d.50%

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