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A firm has two alternatives for the improvement of its current production system. The data are as follows: Machine A Machine B First Cost P6M

A firm has two alternatives for the improvement of its current production system. The data are as follows:

Machine A Machine B

First Cost P6M First cost P6,518,622

Annual operating cost P250T Annual operating cost P263,207

Service life 4 years Service life 6 years

Salvage value P150T Salvage value P128,035

Using the Present Value (PV) Method and with the firms interest rate of 22% cpd. annually, what the PV of Machine B?

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