1.) A firm is considering purchasing equipment that will reduce cost by P580,000. The equipment costs P360,000 and has a salvage value of P52,000 and a life of 10 years. The annual maintenance cost is P12,400. While not in use by the firm, the equipment can be rented to others to generate an income of P14,000 per year. If money can be invested for an 14 percent return, is the firm justified in buying the equipment? Show complete solution