A pipeline contractor can purchase a needed truck for 43000, Ask an Expert

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A pipeline contractor can purchase a needed truck for $43,000. Its estimated life is 6 years, and it has no salvage value. Maintenance is estimated to be $1,800 per year. Operating expense is $60 per day. The contractor can hire a similar unit for $170 per day. MARR is 7%.

(a) How many days per year must the truck’s services be needed such that the two alternatives are equally costly?

(b) If the truck is needed for 180 days/year, should the contractor buy the truck or hire the similar unit?

(c) Determine the dollar amount of annual savings generated by using the preferred alternative rather than the nonpreferred.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92417710

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