Question
In: Economics
An irrigation canal contractor wants to determine whether he should purchase a used Caterpillar mini excavator...
An irrigation canal contractor wants to determine whether he should purchase a used Caterpillar mini excavator or a Toro powered rotary tiller for servicing irrigation ditches in an agricultural area of California. The initial cost of the excavator is $26,500 with a $9000 salvage value after 10 years. Fixed costs for insurance, license, etc. are expected to be $18,000 per year. The excavator will require one operator at $15 per hour and maintenance at $1 per hour. In 1 hour, 0.15 mile of ditch can be prepared. Alternatively, the contractor can purchase a tiller and hire 2 workers at $11 per hour each. The tiller costs $1200 and has a useful life of 5 years with no salvage value. Its operating cost is expected to be $1.20 per hour, and with the tiller, the two workers can prepare 0.04 mile of ditch in 1 hour. The contractor’s MARR is 10% per year. Determine the number of miles of ditch per year the contractor would have to service for the two options to break even. Solve the problem using Annual worth (AW), present worth (PW), anf future worth (FW).
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Veritas Inc. has decided to acquire a new Hydraulic Excavator. It has three options. Caterpillar: purchase...
Veritas Inc. has decided to acquire a new Hydraulic Excavator.
It has three options. Caterpillar: purchase cost of $350,324 and
operating costs of $21,964 per year (paid at the end of each year).
John Deere: purchase cost of $285,068 and operating costs of
$20,274 per year (paid at the end of each year). Volvo: purchase
cost of $307,686 and operating costs of $15,767 per year (paid at
the end of each year). Assume that Geek Inc. has a budget of...
Veritas Inc. has decided to acquire a new Hydraulic Excavator. It has three options. Caterpillar: purchase...
Veritas Inc. has decided to acquire a new Hydraulic Excavator.
It has three options.
Caterpillar: purchase cost of $356609 and operating costs of
$20439 per year (paid at the end of each year).
John Deere: purchase cost of $280828 and operating costs of
$24980 per year (paid at the end of each year).
Volvo: purchase cost of $311464 and operating costs of $18932
per year (paid at the end of each year).
Assume that Geek Inc. has a budget of...
Should Mai Lease or Purchase? Mai is considering the purchase of a Mini Cooper and has...
Should Mai Lease or Purchase?
Mai is considering the purchase of a Mini Cooper and has
negotiated a final price of $23,450. She’s trying to decide whether
to lease or purchase the vehicle.
•
If she leases, she’ll have to pay a $550 security deposit, a
capital cost reduction (down payment) equal to 10% of the vehicle’s
cost, and monthly payments of $415 over the three-year term of the
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The U.S government wants to determine whether immigrants should be tested for a contagious disease, and...
The U.S government wants to determine whether immigrants should
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decision on financial considerations. Assume that each immigrants
who is allowed to enter the United States and has the disease costs
the country $100,000. Also, assume that each immigrants who is
allowed to enter the United States and does not have the disease
will contribute $10,000 to the national economy. Finally, assume
that x percent of all potential...
Calculate the NPV for the following project. The company wants to determine whether it should expand...
Calculate the NPV for the following project. The company wants
to determine whether it should expand and purchase a new piece of
equipment (20% CCA Rate). The equipment will cost $100,000, have a
useful life of 20 years, and have a projected salvage value of
$5,000. By purchasing the equipment, the company can increase its
net revenues by $7,500 per year. Using a discount rate of 10% and a
tax rate of 30%, should the company purchase the equipment?
A warehouse is trying to determine whether they should purchase or lease a pallet wrapping station....
A warehouse is trying to determine whether they should purchase
or lease a pallet wrapping station. If the warehouse buys a pallet
wrapping station, it will cost $7,000 and will be depreciated as
7-year MACRS property. It would have negligible salvage value at
the end of its useful life. Alternatively, the company could rent a
pallet wrapping station for $700 per year with payments due at the
end of each year. The operating costs and maintenance costs for the
pallet...
An educator wants to determine whether early exposure to school will affect IQ. He enlists the...
An educator wants to determine whether early exposure to school
will affect IQ. He enlists the aid of the parents of 12 pairs of
preschool-age identical twins who agree to let their twins
participate in his experiment. One member of each twin pair is
enrolled in preschool for 2 years, while the other member of each
pair remains at home. At the end of the 2 years, the IQs of all the
children are measured.
Research Hypothesis:
Null Hypothesis:
Statistical...
A contractor plans to purchase a pickup. Select the correct equation and factor to determine if...
A contractor plans to purchase a pickup. Select the correct
equation and factor to determine if a contractor plans to purchase
a pickup truck in 10 years, how much should the contractor invest
at 10% interest today to have the $55,000 needed to purchase the
truck at the end of 10 years?
Select one:
a. 15,000
b.11,580
c. 18,630
d.21,230
A professor wants to determine whether her department should keep the requirement of college algebra as...
A professor wants to determine whether her department should
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Suppose a company wants to decide whether to lease or purchase an asset. Purchase: The capital...
Suppose a company wants to decide whether to lease or purchase
an asset.
Purchase: The capital cost required to purchase
the asset is $1,000,000 (at time zero) with a salvage value of
$500,000 at the end of the 5th year. The purchased asset can be
depreciated based on MACRS 5-year life depreciation with the half
year convention (table A-1 at IRS
(https://www.irs.gov/publications/p946) over six years (from year 0
to year 5).
Lease: The asset can be leased for 5 years...
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