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show cash flow diagram A Capitalized cost was computed to be ₱2M. The structure includes some...

show cash flow diagram

A Capitalized cost was computed to be ₱2M. The structure includes some additional expenses of ₱100,000 at the beginning of the year for the next 15 years, a renewal cost of ₱200,0000 would occur in which the expected life of the structure is 5 years. Another cost to consider starting at the end of the tenth year for 20 years is expected amounting to ₱10,000. If the interest rate is 9% per year, determine the perpetual maintenance of this structure.

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Answer #1

Calculation of Perpetual maintenance of structure

Capitalized Cost = ₱2M

Additional Expenses= ₱100,000 for 15 years at begining of each year(PVAF for 15 years, 9%=8.783)

=100000*8.783= ₱8,78,300

Renewal Cost= ₱200,0000 for 5years (PVAF for 5 years, 9%= 3.889)

=2000000*3.889= ₱77,78,000

Another Cost= ₱10,000 for 20 years starting at the end of 10th year(PVAF for 20 years, 9%=4.2)

=10,000*4.2= ₱42,000

Total Cost= ₱2M+₱8,78,300+₱77,78,000+₱42,000= ₱1,06,98,300

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