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A firm is charged Php 500 per ton for hauling its raw materials by a trucking company. Forty tons per day are hauled for 300

A firm is charged Php 500 per ton for hauling its raw materials by a trucking company. Forty tons per day are hauled for 300 days a year. It is desired to install a railway system which would the cost for Php 75 per ton. Maintenance cost for this is Php 75,000 per year. Tax is 1%. Average earning rate of money is 7% (a) If the company has all the cash necessary for the installation, would you recommend the change? (b) If the company has to float Php 12,000,000 worth of non-callable bonds at 7% that will mature in 10 years to have this capital for the project, would you recommend the change?.

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