Question
Sharon Inc., a manufacturer of snowmobiles has detected asbestos, a haz ardous material, in the insulation of its factory. A complete strip and repair job
Sharon Inc., a manufacturer of snowmobiles has detected asbestos, a haz ardous material, in
the insulation of its factory. A complete strip and repair job will have to be done at a considerablecost. Two bids for the job have been obtained. Doust Construction Inc. will do the work for$120,000. With a $20,000 down payment, Doust Construction will finance the balance over sixyears at 10 percent, requiring Sharon to make six equal annual payments. Chamberlain Inc. will dothe job for $122,500 and will finance the entire amount at 6 percent, requiring Sharon to make sixannual payments. Sharon's best available use of money to do the strip and repair job is 8 percent.Which contractor should Sharon's use?
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