(Solved): The City of Dasmarias bought a 10 hp motor for pumping potable water three years ago. Its antici ...

The City of Dasmariñas bought a 10 hp motor for pumping potable water three years ago. Its anticipated usable life was 10 years. The city cannot supply the present demand for water with the current motor because to the rapid development of that area. The city can deal with the situation by adding a second 5 horsepower motor or by upgrading the existing 10 horsepower motor to a new 15 horsepower motor. The information about these motors has finally been compiled. The 10 horsepower motor is currently valued at P10,000. Find the most advantageous choice with a 15% interest rate. Purchase cost (P) Rs. Life in years Salvage value at the end of the machine life (Rs) Annual operating maintenance cost (Rs) Your answer & Old 10 hp motor 25,000 10 1,500 1,600 Currency is in pesos New 5 hp motor 10,000 7 800 1,000 New 15 hp motor 35,000 7 4,000 500