A regional infrastructure building and maintenance contractor must decide to buy a new compact horizontal directional drilling (HDD) machine now, or wait and buy it 2 years from now when the a large pipeline contract will require the new equipment. The HDD machine will include an innovative pipeloader design and maneuverable undercarriage system. The cost of the system is $68,000 if purchased now or an estimated $81,000 if purchased 2 years from now. At i = 12% per year and f = 5%per year Determine if the contractor should buy now or later: (a) Without any adjustment for inflation (b) With inflation considered

A regional infrastructure building and maintenance contractor must decide to buy a new compact horizontal directional drilling (HDD) machine now, or wait and buy it 2 years from now when the a large pipeline contract will require the new equipment. The HDD machine will include an innovative pipeloader design and maneuverable undercarriage system. The cost of the system is $68,000 if purchased now or an estimated $81,000 if purchased 2 years from now. At i = 12% per year and f = 5%per year Determine if the contractor should buy now or later: (a) Without any adjustment for inflation (b) With inflation considered

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A regional infrastructure building and maintenance contractor
must decide to buy a new compact horizontal directional
drilling (HDD) machine now, or wait and buy it 2 years from
now when the a large pipeline contract will require the new
equipment. The HDD machine will include an innovative
pipeloader design and maneuverable undercarriage system.
The cost of the system is $68,000 if purchased now or an
estimated $81,000 if purchased 2 years from now. At i=
12% per year and f = 5% per year
Determine if the contractor should buy now or later:
(а)
Without any adjustment for inflation
(Б)
With inflation considered

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