Due to increasing age and downtime, the productivity of a contractor’s excavator is expected to decline with each passing year. Using the given data, calculate the price in terms of rupees per m3 that the contractor must charge to cover the cost of buying and selling the excavator.

C ost new 5 ` 2,200,000 R esale price at the end of year 6 5 ` 900,000 C ontractor borrows at i 5 10%

P roduction decline at r 5 (2) 6%

P roduction for year 1 5 160,000 m3 A ssume all funds are credited at end of year