Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Hello, I need help with this question, I have come to two answers which were both said to be incorrect. The first being $579.06 and
Hello, I need help with this question, I have come to two answers which were both said to be incorrect. The first being $579.06 and second being $753.67. I have included a hint below as well that was given to me. Thank you.
Set up the annual cost with the breakeven days of 51.986 for the purchase option and 100 for the rent option. Use Goal Seek to obtain the daily rental cost. -100 x 180 - x x 100 = -63423.2643Required Information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $166,000, a salvage value of $70,000, a life of 10 years, a maintenance cost of $30,000 per year, and an operating cost of $260 per day. Alternatively, the company can rent the necessary equipment for $1040 per day and hire a driver at $180 per day. When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days per year; however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day. The daily rental cost to justify renting over purchasing is determined to be $ 753.67Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started