Ross is considering establishing his own small company. An investment of P500,000 will be required which will be recovered in 14 years. It is estimated that sales will be P850,000 per year and that operating expenses will be as follows: Materials- P165,000 per year, Labor-P280,000 per year, Overhead-P40,000 + 12% of sales per year, Selling expense- P60,000. Ross will give his regular job paying P220,000 per year and devote full time to the operation of the business; this will result in decreasing labor cost by P45,000 per year, material cost by P25,000 per year and overhead cost by P30,000 per year. If the man expects to earn at least 20% of his capital, what is the ROR in %?
-using Present Worth method, determine the PW net cash flow (should he invest?)
-using Future Worth method, determine the FW net cash flow (should he invest?)
-using Annual Worth method, determine the excess of the cash flow (should he invest?)
