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  • ROR Quiz

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    Jeremy Valerio
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    An oil company is considering using a special coating on its underground gasoline tanks that would extend the tank lifespan from 10 to 15 years, but increase the cost of each 40,000 tank to 58,000. The installation cost is 24,000 for both regular and special tanks. With zero salvage value and a 26% interest rate, the company must determine if using the special coating provides a sufficient return on investment.

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    An oil company is considering using a special coating on its underground gasoline tanks that would extend the tank lifespan from 10 to 15 years, but increase the cost of each 40,000 tank to 58,000. The installation cost is 24,000 for both regular and special tanks. With zero salvage value and a 26% interest rate, the company must determine if using the special coating provides a sufficient return on investment.

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    © All Rights Reserved
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    9 views1 page

    ROR Quiz

    Uploaded by

    Jeremy Valerio
    An oil company is considering using a special coating on its underground gasoline tanks that would extend the tank lifespan from 10 to 15 years, but increase the cost of each 40,000 tank to 58,000. The installation cost is 24,000 for both regular and special tanks. With zero salvage value and a 26% interest rate, the company must determine if using the special coating provides a sufficient return on investment.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
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    An oil company is being offered a special coating for the gasoline underground tank installation in its

    service stations which will increase the life of the tank from the usual 10 years to 15 years. The cost of
    the special coating will increase the cost of the 40,000-tank to 58,000. Cost of installation for either of
    the tanks is P24,000. If the salvage value for both is zero, and interest rate is 26%, would you
    recommend the use of the special coating? SOLVE for ROR

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