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A firm is considering whether to purchase or lease land-moving equipment. The data associated with the purchase are as follows Initial cost = $150,000 Residual value = $12,000 %3D Maintenance cost = $1,800/per year Operator cost per day = $300/day If the equipment is rented, the operator cost is incurred, at the rate of $300 per day and $100 for the daily rental of the equipment.

A firm is considering whether to purchase or lease land-moving equipment. The data associated with the purchase are as follows Initial cost = $150,000 Residual value = $12,000 %3D Maintenance cost = $1,800/per year Operator cost per day = $300/day If the equipment is rented, the operator cost is incurred, at the rate of $300 per day and $100 for the daily rental of the equipment.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A firm is considering whether to purchase or lease land-moving equipment. The data associated with the purchase are as follows Initial cost = $150,000 Residual value = $12,000 Maintenance cost = $1,800/per year Operator cost per day = $300/day If the equipment is rented, the operator cost is incurred, at the rate of $300 per day and $100 for the daily rental of the equipment. Determine the minimum number of days per year the equipment must be used to justify the purchase. Use an interest rate of 7%. Life = 10 years
Transcribed Image Text:A firm is considering whether to purchase or lease land-moving equipment. The data associated with the purchase are as follows Initial cost = $150,000 Residual value = $12,000 Maintenance cost = $1,800/per year Operator cost per day = $300/day If the equipment is rented, the operator cost is incurred, at the rate of $300 per day and $100 for the daily rental of the equipment. Determine the minimum number of days per year the equipment must be used to justify the purchase. Use an interest rate of 7%. Life = 10 years
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