Question
A village in Ohio is considering the purchase of a new snowplow. The snowplow could be purchased for $240,000 and would be expected to have
A village in Ohio is considering the purchase of a new snowplow. The snowplow could be purchased for $240,000 and would be expected to have a salvage value of $24,000 at the end of its 20-year useful life. Operating maintenance costs would be $18,000 in the first year, increasing by $1,800 each year thereafter. per year.
MARR+18%
A) Using MARR find capital recovery cost associated with the snowplow?
B) Since the snowplow would not be needed and used every day, the village also has the opportunity to simply rent the snowplow when needed, at a cost of $1,200 per day. In this case, how many days per year, , would the village need to use the snowplow in order for the annual cost of leasing the snowplow to be economically equivalent to the costs associated with purchasing it?
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