Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A mechanical subcontractor wants to buy an electric generator to power his equipment rather than use electricity from the local power company. After searching the

image text in transcribed
A mechanical subcontractor wants to buy an electric generator to power his equipment rather than use electricity from the local power company. After searching the market, he found 2 options that had a fair price, either to buy a brand new Honda Dayton 5KWh Electric Generator or rent it directly from the store. Furthermore, he had the option to rent the generator with the bonus of free gas for a year either per day, per week or per month. The price of the new generator was $1,719 and it consumes $1.49/per hour for gas. He expects to use the generator 8 hours per day and 5 days a week. The daily rent is $56.5, the weekly rent is $170 and the monthly rent is $510. The local power company is willing to provide him with power for 40 cents/KW and a fixed fee of $10/month plus 5% of the total for taxes for the duration of the project.
1.Draw the break-even graph.
2.Calculate the break-even points. How much time should the subcontractor use the generator to make his investment profitable?
3. What should the subcontractor do if he needs electricity for a project that will last for 18 months?
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Principles

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

7th Canadian Edition Volume 1

1119048508, 978-1119048503

More Books

Students also viewed these Accounting questions

Question

17. Why is Littles Law a useful queuing concept?

Answered: 1 week ago

Question

What is the difference between risk aversion and loss aversion?

Answered: 1 week ago