A contractor won a bid to repave a span of badly-damaged concrete road in the south. He is offered a crane mounted pneumatic breaker which will cost 1,200,000 with a salvage value of 150000 at the end of its estimated life of 15 years. The annual cost of maintenance, taxes, licenses and insurance is 12% of the first cost, regardless of how the equipment is used. The variable cost is 550 per day. The equipment is capable of breaking 30 square meters of 20 cm thick concrete road per day. Without the equipment, two laborers receiving 50 each per day could break an average of one square meter of the same road per day. How many square meters of the road per year must the equipment break to make the machine an economical investment?
A contractor won a bid to repave a span of badly-damaged concrete road in the south. He is offered a crane mounted pneumatic breaker which will cost 1,200,000 with a salvage value of 150000 at the end of its estimated life of 15 years. The annual cost of maintenance, taxes, licenses and insurance is 12% of the first cost, regardless of how the equipment is used. The variable cost is 550 per day. The equipment is capable of breaking 30 square meters of 20 cm thick concrete road per day. Without the equipment, two laborers receiving 50 each per day could break an average of one square meter of the same road per day. How many square meters of the road per year must the equipment break to make the machine an economical investment?
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