Question
Your company is looking at purchasing a dump truck and has narrowed the selection to two pieces of equipment. The first truck costs $65,000 with
Your company is looking at purchasing a dump truck and has narrowed the selection to two pieces of equipment. The first truck costs $65,000 with a useful life of four years. At the end of the fourth year the salvage value is estimated to be $10,000. The dump truck could be billed out at $68.00 per hour and costs $13.00 per hour to operate. The second truck costs $125,000 with a useful life of eight years. At the end of the eighth year the salvage value is estimated to be $10,000. The loader could be billed out at $98.00 per hour and costs $30.00 per hour to operate. The operator of either alternative costs $35.00 per hour. Using 1,000 billable hours per year, determine the NPV for the purchase of the dump truck using a MARR of 18%. Which truck should your company purchase using a MARR of 15%?
Step 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