Required information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $202,000, a salvage value of $70,000, a life of 10 years, a maintenance cost of $34,000 per year, and an operating cost of $240 per day. Alternatively, the company can rent the necessary equipment for $1140 per day and hire a driver at $180 per day. the company's MARR is 14% per year, how many days per year must the company need the equipment in order to justify its urchase?
Required information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $202,000, a salvage value of $70,000, a life of 10 years, a maintenance cost of $34,000 per year, and an operating cost of $240 per day. Alternatively, the company can rent the necessary equipment for $1140 per day and hire a driver at $180 per day. the company's MARR is 14% per year, how many days per year must the company need the equipment in order to justify its urchase?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $202,000, a salvage value of $70,000, a life of 10 years, a maintenance cost of $34,000 per year, and an operating cost of $240 per day. Alternatively, the company can rent the necessary equipment for $1,140 per day and hire a driver at $180 per day.
If the company's MARR (Minimum Acceptable Rate of Return) is 14% 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 _______ days per year in order to justify its purchase.
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