A construction company has two alternatives to purchase an excavator which is to be employed at a construction site for excavation of earth. The cash flow details of the two alternatives are presented as follows;
Alternative-1:
Initial purchase cost = 4865000 birr
Salvage value = 1250000 birr
Useful life = 12 years
Operating cost: The operating cost for excavating 1m3 of earth is 11 birr The excavator (Alternative-1) can excavate 52 m3 of earth in one hour.
Alternative-2:
Initial purchase cost = 5350000 birr
Salvage value =1410000 birr
Useful life = 12 years
Operating cost: The operating cost for excavating 1m3 of earth is 8 birr The excavator (Alternative-2) can excavate 60 m3 of earth in one hour.
The company\'s minimum attractive rate of return (MARR) is 10.5% per year. How many hours the excavators have to operate per year, for the equivalent uniform annual worth of cash flows of both the alternatives to be equal