5.0 Maintenance cost of an equipment is P20,000 a year for two years , P40,000 at the end of four years and P80,000 at the end of eight years .Compute the semi-annual amount that must be set aside for this equipment.
If it 20K for 2 years, that is 10K per year. Half a year would be 5K.
To compute the semi-annual amount that must be set aside for the equipment, we need to break down the maintenance costs into semi-annual intervals.
Let's start by finding the maintenance cost at the end of each semi-annual interval.
The equipment has a maintenance cost of P20,000 per year for two years. Therefore, the maintenance cost over a two-year period is:
2 years x P20,000/year = P40,000
Since the maintenance cost is incurred over a two-year period, we need to divide this by the number of semi-annual intervals:
P40,000 / 4 semi-annual intervals = P10,000
So, for the first two years, P10,000 must be set aside every semi-annual interval.
The equipment then has a maintenance cost of P40,000 at the end of four years. Again, we need to divide this by the number of semi-annual intervals:
P40,000 / 8 semi-annual intervals = P5,000
So, for the next four years (from the third to the sixth year), P5,000 must be set aside every semi-annual interval.
Finally, the equipment has a maintenance cost of P80,000 at the end of eight years. We divide this by the number of semi-annual intervals:
P80,000 / 16 semi-annual intervals = P5,000
So, for the last two years (from the seventh to the eighth year), P5,000 must be set aside every semi-annual interval.
In summary, the semi-annual amount that must be set aside for this equipment is as follows:
- Years 1-2: P10,000
- Years 3-6: P5,000
- Years 7-8: P5,000
To compute the semi-annual amount that must be set aside for the equipment's maintenance cost, we need to determine the total maintenance cost for the given period and divide it by the number of semi-annual periods.
Let's break down the given information:
Maintenance cost for the first 2 years: P20,000/year × 2 years = P40,000
Maintenance cost at the end of 4 years: P40,000
Maintenance cost at the end of 8 years: P80,000
To compute the semi-annual amount, we first need to calculate the total maintenance cost over the 8-year period:
Total maintenance cost = Maintenance cost for 2 years + Maintenance cost at 4 years + Maintenance cost at 8 years
= P40,000 + P40,000 + P80,000
= P160,000
Since there are 8 years in total and we are looking for the semi-annual amount, we divide the total maintenance cost by the number of semi-annual periods:
Semi-annual amount = Total maintenance cost / Number of semi-annual periods
= P160,000 / (8 years × 2 semi-annual periods per year)
= P160,000 / 16
= P10,000
Therefore, the semi-annual amount that must be set aside for this equipment is P10,000.