Homework Help is Here – Start Your Trial Now!
Business
Finance
As a Project Engineering had been tasked to make an analysis and to recommend to your company on the economic justification on 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, 10-days a month it is being rented out. The Brand X is the newer crane which having better fuel efficiency and lower maintenance cost. Based on your data gathering, you have this information derived for the analysis. No. Description Unit Brand X Brand Y 5 years 1 250 MT mobile crane specification unit No warranty warranty RM 2,000,000 2 Cost of the crane Unit RM 1,200,000 Save on the crane rental from 3rd Monthly RM 80,000 RM 80,000 3 party Estimated income from rental 4 Daily RM 5,000 RM 5,000 Estimated maintenance cost plus 5 inspection by Puspakom and DOSH months Per 6 RM 3,000 RM 8,000 6 Estimated Operator and fuel cost Monthly RM 15,000 RM 20,000 Dispose value at end of the project 7 construction, 3 years Unit RM 1,200,000 RM 600,000

As a Project Engineering had been tasked to make an analysis and to recommend to your company on the economic justification on 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, 10-days a month it is being rented out. The Brand X is the newer crane which having better fuel efficiency and lower maintenance cost. Based on your data gathering, you have this information derived for the analysis. No. Description Unit Brand X Brand Y 5 years 1 250 MT mobile crane specification unit No warranty warranty RM 2,000,000 2 Cost of the crane Unit RM 1,200,000 Save on the crane rental from 3rd Monthly RM 80,000 RM 80,000 3 party Estimated income from rental 4 Daily RM 5,000 RM 5,000 Estimated maintenance cost plus 5 inspection by Puspakom and DOSH months Per 6 RM 3,000 RM 8,000 6 Estimated Operator and fuel cost Monthly RM 15,000 RM 20,000 Dispose value at end of the project 7 construction, 3 years Unit RM 1,200,000 RM 600,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 17P
See similar textbooks
icon
Related questions
Question
  1. Based on Return of Investment (ROI) evaluation, which unit will you recommend to your management to be purchased and why?
As a Project Engineering had been tasked to make an analysis and to recommend to your company on the economic justification on 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, 10-days a month it is being rented out. The Brand X is the newer crane which having better fuel efficiency and lower maintenance cost. Based on your data gathering, you have this information derived for the analysis. No. Description Unit Brand X Brand Y 5 years warranty RM 2,000,000 250 MT mobile crane specification unit No warranty Cost of the crane Unit RM 1,200,000 Save on the crane rental from 3rd 3 party Estimated income from rental Monthly RM 80,000 RM 80,000 4 Daily RM 5,000 RM 5,000 Estimated maintenance cost plus inspection by Puspakom and DOSH Per 6 RM 3,000 RM 8,000 months Estimated Operator and fuel cost Monthly RM 15,000 RM 20,000 Dispose value at end of the project 7 construction, 3 years Unit RM 1,200,000 RM 600,000
Transcribed Image Text:As a Project Engineering had been tasked to make an analysis and to recommend to your company on the economic justification on 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, 10-days a month it is being rented out. The Brand X is the newer crane which having better fuel efficiency and lower maintenance cost. Based on your data gathering, you have this information derived for the analysis. No. Description Unit Brand X Brand Y 5 years warranty RM 2,000,000 250 MT mobile crane specification unit No warranty Cost of the crane Unit RM 1,200,000 Save on the crane rental from 3rd 3 party Estimated income from rental Monthly RM 80,000 RM 80,000 4 Daily RM 5,000 RM 5,000 Estimated maintenance cost plus inspection by Puspakom and DOSH Per 6 RM 3,000 RM 8,000 months Estimated Operator and fuel cost Monthly RM 15,000 RM 20,000 Dispose value at end of the project 7 construction, 3 years Unit RM 1,200,000 RM 600,000
Expert Solution
steps

Step by step

Solved in 8 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Ratio Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS