Solution: How much could the corporation afford to pay for another type of truck?

A corporation uses a type of motor truck which costs P5,000 with life of 2 years and final salvage value of P800. How much could the corporation afford to pay for another type of truck of the same purpose whose life is 3 years with a final salvage value of P1,000. Money is worth 4%.

Problem Statement: CE Board May 1997

A corporation uses a type of motor truck which costs P5,000 with life of 2 years and final salvage value of P800. How much could the corporation afford to pay for another type of truck of the same purpose whose life is 3 years with a final salvage value of P1,000. Money is worth 4%.

• A. P8,450.66
• B. P7,164.37
• C. P6,398.24
• D. P9,034.56

The annual cost of the new motor truck is P7,164.3.

Solution:

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