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Can you solve using excel? Charlies Truck Repair and Service has a new contract that requires him to purchase and maintain new equipment for work
Can you solve using excel?
Charlies Truck Repair and Service has a new contract that requires him to purchase and maintain new equipment for work on 18-wheeler trucks and heavy road equipment. Two separate vendors have made quotes and estimates for Charlie. Use the estimates and a 6% per year return requirement to find the better economic option. One problem is that Charlie does not currently know if the contract will last for 5, 8, or 10 years. He needs a recommendation for all three time periods.
Vendor | Ferguson | Halgrove |
First cost P, $ | 203,000 | 396,000 |
M&O, $ per year | 90,000 | 82,000 |
Salvage value, SV | 10% of P | 10% of P |
Maximum life, years | 5 | 10 |
- If the contract lasts 5 years, what is the present worth of Ferguson?
- If the contract lasts 5 years, what is the present worth of Halgrove?
- If the contract lasts 5 years, would you recommend Ferguson or Halgrove?
- If the contract lasts 8 years, what is the present worth of Ferguson?
- If the contract lasts 8 years, what is the present worth of Halgrove?
- If the contract lasts 8 years, would you recommend Ferguson or Halgrove?
- If the contract lasts 10 years, what is the present worth of Ferguson?
- If the contract lasts 10 years, what is the present worth of Halgrove?
- If the contract lasts 10 years, would you recommend Ferguson or Halgrove?
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