Required information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $205,000, a salvage value of $85,000, a life of 10 years, a maintenance cost of $32,000 per year, and an operating cost of $200 per day. Alternatively, the company can rent the necessary equipment for $1170 per day and hire a driver at $180 per day. If the company's MARR is 13% per year, how many days per year must the company need the equipment in order to justify its purchase? The company must need the equipment 56.66| days per year in order to justify Its purchase. When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days per year, however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day. The dally rental cost to justify renting over purchasing is determined to be $ 622
Required information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $205,000, a salvage value of $85,000, a life of 10 years, a maintenance cost of $32,000 per year, and an operating cost of $200 per day. Alternatively, the company can rent the necessary equipment for $1170 per day and hire a driver at $180 per day. If the company's MARR is 13% per year, how many days per year must the company need the equipment in order to justify its purchase? The company must need the equipment 56.66| days per year in order to justify Its purchase. When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days per year, however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day. The dally rental cost to justify renting over purchasing is determined to be $ 622
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I need help with the second part of this question. For the first part, I got 56.66, and it is correct. In the second part, the answer is NOT 622.29. Thank you so much.
![Required information
A land development company is considering the purchase of earth-moving equipment. This equipment will have an
estimated first cost of $205,000, a salvage value of $85,000, a life of 10 years, a maintenance cost of $32,000 per year,
and an operating cost of $200 per day. Alternatively, the company can rent the necessary equipment for $1170 per day
and hire a driver at $180 per day.
If the company's MARR is 13% per year, how many days per year must the company need the equipment in order to justify its
purchase?
The company must need the equipment 56.66 days per year in order to justify its purchase.
When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days
per year, however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the
equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day.
The dally rental cost to justify renting over purchasing is determined to be $ 622]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4bbb835f-0057-41b8-a852-8225c6046161%2F0cb0c0ab-2d4e-4d65-8d2b-a8ada7410199%2Fk0l7ewtl_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
A land development company is considering the purchase of earth-moving equipment. This equipment will have an
estimated first cost of $205,000, a salvage value of $85,000, a life of 10 years, a maintenance cost of $32,000 per year,
and an operating cost of $200 per day. Alternatively, the company can rent the necessary equipment for $1170 per day
and hire a driver at $180 per day.
If the company's MARR is 13% per year, how many days per year must the company need the equipment in order to justify its
purchase?
The company must need the equipment 56.66 days per year in order to justify its purchase.
When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days
per year, however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the
equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day.
The dally rental cost to justify renting over purchasing is determined to be $ 622]
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