A food processing plant consumed 60,000kwh of electric energy annually and pays an average of P2.00 per kWh. A study is being made to generate to its own power to supply the plant the energy required, and that the power plant installed would cost P2, 000,000. Annual operation and maintenance, P800, 000. Other expenses, P100, 000 per year. Life of power plant is 15 years; salvage value at the end of life is P200, 000; annual taxes and insurance, 6% of first cost; and rate of interest is 15%. Is the power plant is justifiable?

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