Present Economy

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eaomar's picture
Present Economy

The Philippine Institute of Civil Engineers is planning to construct its own building. Two proposals are being considered:

(a) The construction of the building now to cost PhP 400,000.00
(b) The construction of a smaller building now, to cost PhP 300,000.00 and at the end of 5 years, an extension to be added to cost PhP 200,000.00

Which proposal is more economical if interest is 20%, depreciation is disregarded and by how much?

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