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    Olpsfm02 Finals Quiz 9 PDF

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    Ronaliza Mallari
    The total revenue from the project is PHP 1.1 million, giving a return on investment of 220% which is very profitable and increases each year, so the project should be accepted. Building a house with a total cost of PHP 20 million that can be sold for PHP 23 million within one year results in a profit of PHP 3 million. Waiting one year to sell it would only yield PHP 21.2 million due to a 6% opportunity cost of capital, so it is better to sell it immediately rather than waiting.

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    Olpsfm02 Finals Quiz 9 PDF

    Uploaded by

    Ronaliza Mallari
    30 views1 page
    The total revenue from the project is PHP 1.1 million, giving a return on investment of 220% which is very profitable and increases each year, so the project should be accepted. Building a house with a total cost of PHP 20 million that can be sold for PHP 23 million within one year results in a profit of PHP 3 million. Waiting one year to sell it would only yield PHP 21.2 million due to a 6% opportunity cost of capital, so it is better to sell it immediately rather than waiting.

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    OLPSFM02 FINALS QUIZ 9.pdf

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    The total revenue from the project is PHP 1.1 million, giving a return on investment of 220% which is very profitable and increases each year, so the project should be accepted. Building a house with a total cost of PHP 20 million that can be sold for PHP 23 million within one year results in a profit of PHP 3 million. Waiting one year to sell it would only yield PHP 21.2 million due to a 6% opportunity cost of capital, so it is better to sell it immediately rather than waiting.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    30 views1 page

    Olpsfm02 Finals Quiz 9 PDF

    Uploaded by

    Ronaliza Mallari
    The total revenue from the project is PHP 1.1 million, giving a return on investment of 220% which is very profitable and increases each year, so the project should be accepted. Building a house with a total cost of PHP 20 million that can be sold for PHP 23 million within one year results in a profit of PHP 3 million. Waiting one year to sell it would only yield PHP 21.2 million due to a 6% opportunity cost of capital, so it is better to sell it immediately rather than waiting.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 1

    1.

    The total revenue is 75,000 + 150,000 + 225, 000 + 300, 000 + 350, 000
    = Php 1, 100, 000.

    Rate of annual returns = Php 1, 100, 000 × 100% { ROI = INCOME × 100%}
    Php 500, 000 COST
    = 2.2
    So, I will accept the project. Because the higher the ROI, the stronger the
    profitability of the project, and every year the return is steadily increasing.
    2. According to the given problem, land cost is 4.5 while construction cost is 15.5.
    So, total cost of completing a house would be 20M. Now if we sell this house in
    23M within a year, it means that we can get a profit of 3M. Now considering
    opportunity cost of capital of 6%, this means that after one year, for a price of
    20M house, we can get 20 x (1.06) = 21.2M. Since 21.2 is less than 23M, so
    waiting for one year @ 6% is not a wise idea.

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