A contractor won a bid to repave so many km. of badly damage concrete road in the south. He is offered a crane mounted pneumatic breaker which will cost P1,400,000 with a salvage value of P200,000 at the end of its estimated life of 20 years. The annual cost of maintenance, taxes, licenses, and insurance is 13% of the first cost, regardless of hoe the equipment is used. The variable cost is P600.00 per day. The equipment is capable of breaking 35sqm of 25 cm thick concrete road per day. Without the equipment, two laborers receiving P50 each per day could break an average of one sq.m. of the same road per day. How many sq.m. of the road per year must the equipment break to make the machine economical investment.
A contractor won a bid to repave so many km. of badly damage concrete road in the south. He is offered a crane mounted pneumatic breaker which will cost P1,400,000 with a salvage value of P200,000 at the end of its estimated life of 20 years. The annual cost of maintenance, taxes, licenses, and insurance is 13% of the first cost, regardless of hoe the equipment is used. The variable cost is P600.00 per day. The equipment is capable of breaking 35sqm of 25 cm thick concrete road per day. Without the equipment, two laborers receiving P50 each per day could break an average of one sq.m. of the same road per day. How many sq.m. of the road per year must the equipment break to make the machine economical investment.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
A contractor won a bid to repave so many km. of badly damage concrete road in the south. He is offered a crane mounted pneumatic breaker which will cost P1,400,000 with a salvage value of P200,000 at the end of its estimated life of 20 years. The annual cost of maintenance, taxes, licenses, and insurance is 13% of the first cost, regardless of hoe the equipment is used. The variable cost is P600.00 per day. The equipment is capable of breaking 35sqm of 25 cm thick concrete road per day. Without the equipment, two laborers receiving P50 each per day could break an average of one sq.m. of the same road per day. How many sq.m. of the road per year must the equipment break to make the machine economical investment.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education