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A petroleum company, whose minimum attractive rate of return is 10%, needs to paint the vessels and pipes in its refinery periodically to prevent rust. Tuff-Coat, a durable paint, can be purchased for $8.05 a gallon, while Quick-Cover, a less durable paint, costs $3.25 a gallon. The labor cost of applying a gallon of paint is $6.00. Both paints are equally easy to apply and will cover the same area per gallon. Quick-Cover is expected to last 5 years. How long must Tuff-Coat promise to last to justify its use?

A petroleum company, whose minimum attractive rate of return is 10%, needs to paint the vessels and pipes in its refinery periodically to prevent rust. Tuff-Coat, a durable paint, can be purchased for $8.05 a gallon, while Quick-Cover, a less durable paint, costs $3.25 a gallon. The labor cost of applying a gallon of paint is $6.00. Both paints are equally easy to apply and will cover the same area per gallon. Quick-Cover is expected to last 5 years. How long must Tuff-Coat promise to last to justify its use?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A petroleum company, whose minimum attractive rate of return is 10%, needs to paint the vessels and pipes in its refinery periodically to prevent rust. Tuff-Coat, a durable paint, can be purchased for $8.05 a gallon, while Quick-Cover, a less durable paint, costs $3.25 a gallon. The labor cost of applying a gallon of paint is $6.00. Both paints are equally easy to apply and will cover the same area per gallon. Quick-Cover is expected to last 5 years. How long must Tuff-Coat promise to last to justify its use?

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