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Question 5 Sam is considering buying a new lawnmower. He has a choice between a Lawn Guy mower and a Bargain Joe's Clip Job mower.
Question 5 Sam is considering buying a new lawnmower. He has a choice between a Lawn Guy mower and a Bargain Joe's Clip Job mower. Sam has a MARR of 5 percent. The salvage value of each mower at the end of its service life is zero. Lawn Guy Clip Job First Cost $350 $120 Life 10 years 4 years Annual Gas $60 $40 Annual Maintenance $30 $60 Although Sam has estimated the maintenance costs of the Clip Job at $60, he has heard that the machines have had highly variable maintenance costs. One friend claimed that her Clip Job had maintenance costs comparable to those of the Lawn Guy, but another said the maintenance costs could be as high as $80 per year. Construct a table that shows the annual worth of the Clip Job for annual maintenance costs varying from $30 per year to $80 per year. What Clip Job maintenance costs would make Sam indifferent about the choice between the two mowers, on the basis of annual worth? Construct a graph showing the break-even maintenance costs Which mower would you recommend to Sam? (10 marks)
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