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A contractor must choose between buying or renting a crane for the duration of a 5 year construction project. The contractor uses an MARR of 8%. The crane costs $520,000 and can be sold for $380,000 after 5 years. The cost to operate and maintain the crane is $210,000 per year. Renting the crane costs $310,000 per year including all operating and maintenance costs. Determine the incremental benefit-cost ratio that the contractor should use to decide between buying and renting. Express your answer to two decimal places.

A contractor must choose between buying or renting a crane for the duration of a 5 year construction project. The contractor uses an MARR of 8%. The crane costs $520,000 and can be sold for $380,000 after 5 years. The cost to operate and maintain the crane is $210,000 per year. Renting the crane costs $310,000 per year including all operating and maintenance costs. Determine the incremental benefit-cost ratio that the contractor should use to decide between buying and renting. Express your answer to two decimal places.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A contractor must choose between buying or renting a crane for the duration of a 5 year construction project. The contractor uses an MARR of 8%. The crane costs $520,000 and can be sold for $380,000 after 5 years. The cost to operate and maintain the crane is $210,000 per year. Renting the crane costs $310,000 per year including all operating and maintenance costs. Determine the incremental benefit-cost ratio that the contractor should use to decide between buying and renting. Express your answer to two decimal places.
Transcribed Image Text:A contractor must choose between buying or renting a crane for the duration of a 5 year construction project. The contractor uses an MARR of 8%. The crane costs $520,000 and can be sold for $380,000 after 5 years. The cost to operate and maintain the crane is $210,000 per year. Renting the crane costs $310,000 per year including all operating and maintenance costs. Determine the incremental benefit-cost ratio that the contractor should use to decide between buying and renting. Express your answer to two decimal places.
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