As a Project Engineer, you have been tasked to make ah and company on the economic justification on the option to purchase a used 25OMT mobile crane. The decision is in between Brand X or Brand Y 250 MT mobile crane to be used for the company's project construction activities as well as providing some rental business for three years. As the crane is not used for the whole time, it is to be rented out for 10 days a month. The Brand X is the newer crane which has better fuel efficiency and lower maintenance cost. Based on your data gathering, you have this information derived for the analysis.
As a Project Engineer, you have been tasked to make ah and company on the economic justification on the option to purchase a used 25OMT mobile crane. The decision is in between Brand X or Brand Y 250 MT mobile crane to be used for the company's project construction activities as well as providing some rental business for three years. As the crane is not used for the whole time, it is to be rented out for 10 days a month. The Brand X is the newer crane which has better fuel efficiency and lower maintenance cost. Based on your data gathering, you have this information derived for the analysis.
Chapter2: Loads On Structures
Section: Chapter Questions
Problem 1P
Related questions
Question
![As a Project Engineer, you have been tasked to make an analysis and to recommend to your
company on the economic justification on the option to purchase a used 250MT mobile crane.
The decision is in between Brand X or Brand Y 250 MT mobile crane to be used for the company's
project construction activities as well as providing some rental business for three years. As the
crane is not used for the whole time, it is to be rented out for 10 days a month. The Brand X is the
newer crane which has better fuel efficiency and lower maintenance cost. Based on your data
gathering, you have this information derived for the analysis.
Description
Unit
Brand X
Brand Y
No.
5 years
warranty
RM 2,000,000
250 MT mobile crane specification
unit
No warranty
Cost of the crane
Unit
RM 1,200,000
Saving on the crane rental from 3rd
party if no purchase is made
Monthly
RM 80,000
RM 80,000
Estimated income from rental
Daily
RM 5,000
RM 5,000
Estimated maintenance cost plus
Per 6
inspection by Puspakom and Dept
RM 3,000
RM 8,000
5.
of Occupational Safety and Health
(DOSH)
Estimated Operator and fuel cost
Disposal value at end of the project
construction, 3 years
months
Monthly
RM 15,000
RM 20,000
Unit
RM 1,200,000
RM 600,000
4.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8d674487-20e5-4131-85f5-f8927970123f%2Fc9e87b3d-15af-4666-a18b-a05cd0fa7553%2Fe6u738_processed.jpeg&w=3840&q=75)
Transcribed Image Text:As a Project Engineer, you have been tasked to make an analysis and to recommend to your
company on the economic justification on the option to purchase a used 250MT mobile crane.
The decision is in between Brand X or Brand Y 250 MT mobile crane to be used for the company's
project construction activities as well as providing some rental business for three years. As the
crane is not used for the whole time, it is to be rented out for 10 days a month. The Brand X is the
newer crane which has better fuel efficiency and lower maintenance cost. Based on your data
gathering, you have this information derived for the analysis.
Description
Unit
Brand X
Brand Y
No.
5 years
warranty
RM 2,000,000
250 MT mobile crane specification
unit
No warranty
Cost of the crane
Unit
RM 1,200,000
Saving on the crane rental from 3rd
party if no purchase is made
Monthly
RM 80,000
RM 80,000
Estimated income from rental
Daily
RM 5,000
RM 5,000
Estimated maintenance cost plus
Per 6
inspection by Puspakom and Dept
RM 3,000
RM 8,000
5.
of Occupational Safety and Health
(DOSH)
Estimated Operator and fuel cost
Disposal value at end of the project
construction, 3 years
months
Monthly
RM 15,000
RM 20,000
Unit
RM 1,200,000
RM 600,000
4.
![a) Based on Return of Investment (ROI) evaluation, which unit will you recommend to
your management to be purchased and why? (CO3, PO11, C4)
b) From Life Cycle Cost (LCC) Analysis, would you Brand X or Brand Y crane? What is
your recommendation and why? (CO3, PO11, C4)
c) Based on the Minimum Acceptable Rate of Return (MARR), if the company hurdle
rate is 20 %, would you choose Brand X or Brand Y and why?- include the cashflow
diagram (CO3, PO11, C4)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8d674487-20e5-4131-85f5-f8927970123f%2Fc9e87b3d-15af-4666-a18b-a05cd0fa7553%2F5d6gjbk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:a) Based on Return of Investment (ROI) evaluation, which unit will you recommend to
your management to be purchased and why? (CO3, PO11, C4)
b) From Life Cycle Cost (LCC) Analysis, would you Brand X or Brand Y crane? What is
your recommendation and why? (CO3, PO11, C4)
c) Based on the Minimum Acceptable Rate of Return (MARR), if the company hurdle
rate is 20 %, would you choose Brand X or Brand Y and why?- include the cashflow
diagram (CO3, PO11, C4)
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