A small strip-mining coal company is trying to decide whether it should purchase or lease a new clamshell. If purchased, the "shell" will cost $160000 and is expected to have a $65000 salvage value after 6 years. Alternatively, the company can lease a clamshell for only $10000 per year, but the lease payment will have to be made at the beginning of each year. If the clamshell is purchased, it will be leased to other strip-mining companies whenever possible, an activity that is expected to yield revenues of $18000 per year. If the company's MARR is 20.00% per year, should the clamshell be purchased or leased on the basis of a future worth analysis? Assume the annual M&O cost is the same for both options. (Include a minus sign if necessary.) The future worth when purchased is $ The future worth when leased is $ The clamshell should be (Click to select) (Click to select) leased purchased
A small strip-mining coal company is trying to decide whether it should purchase or lease a new clamshell. If purchased, the "shell" will cost $160000 and is expected to have a $65000 salvage value after 6 years. Alternatively, the company can lease a clamshell for only $10000 per year, but the lease payment will have to be made at the beginning of each year. If the clamshell is purchased, it will be leased to other strip-mining companies whenever possible, an activity that is expected to yield revenues of $18000 per year. If the company's MARR is 20.00% per year, should the clamshell be purchased or leased on the basis of a future worth analysis? Assume the annual M&O cost is the same for both options. (Include a minus sign if necessary.) The future worth when purchased is $ The future worth when leased is $ The clamshell should be (Click to select) (Click to select) leased purchased
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 1E
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