In building their plant, the officers of the International Leather Company had the choice alternatives. One alternative is to build Metro Manila where the plant would cost P2,000,000. Labor would cost...

In building their plant, the officers of the International Leather Company had the choice alternatives.

One alternative is to build Metro Manila where the plant would cost P2,000,000. Labor would cost annually P120,000 and annual overhead P40,000. Taxes and insurance would total 5% of the first cost of the plant

The second alternative would be to build in Bulacan a plant costing P2,250,000. Labor would cost P100,000 annually and overhead would be P55,000. Taxes and insurance would be 3% of the first cost. The cost of raw materials would be the same in either plant. If capital must be recovered within 10 years and money is worth at least 20%, which site should the officers company choose?