Question

A new engine was installed by a cement plant at a cost of P800,000 and projected to have a useful life
of 25 years. At the end of the useful life, it is estimated to have a salvage value of P40,000. Determine
its capitalized cost if interest is 14% compounded annually.

Answer 1

Capitalozed cost= (P800,000- P40,000)/ 25 years

= 30,400