A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration by a construction firm for $ 26,000. The instrument will be used for 6 years and be worth $ 1,500 at that time. The annual cost of use and maintenance will be $ 6,500. Alternatively, a more automated instrument (same property class) available from the manufacturer costs $ 32,000, with use and maintenance costs of only $ 9,000 and salvage value after 6 years of $ 2,000. The marginal tax rate is 25%, and MARR is an after-tax 12%. Determine which alternative is less costly, based upon comparison of after-tax annual worth.
A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration by a construction firm for $ 26,000. The instrument will be used for 6 years and be worth $ 1,500 at that time. The annual cost of use and maintenance will be $ 6,500. Alternatively, a more automated instrument (same property class) available from the manufacturer costs $ 32,000, with use and maintenance costs of only $ 9,000 and salvage value after 6 years of $ 2,000. The marginal tax rate is 25%, and MARR is an after-tax 12%. Determine which alternative is less costly, based upon comparison of after-tax annual worth.
Fundamentals Of Construction Estimating
4th Edition
ISBN:9781337399395
Author:Pratt, David J.
Publisher:Pratt, David J.
Chapter11: Pricing Concrete Work
Section: Chapter Questions
Problem 9RQ: Calculate the cost per cubic yard to place concrete using each of the alternatives described. The...
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Transcribed Image Text:A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property
class) is under consideration by a construction firm for $ 26,000. The instrument will be used for 6 years and be worth $ 1,500 at that
time. The annual cost of use and maintenance will be $ 6,500. Alternatively, a more automated instrument (same property class)
available from the manufacturer costs $ 32,000, with use and maintenance costs of only $ 9,000 and salvage value after 6 years of $
2,000. The marginal tax rate is 25%, and MARR is an after-tax 12%.
Determine which alternative is less costly, based upon comparison of after-tax annual worth.
Show the AW values used to make your decision:
Alternative 1: $
Alternative 2: $
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±10.
Click here to access the TVM Factor Table Calculator
Click here to access the MACRS-GDS table.
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