A pipeline contractor can purchase a needed truck for $40000. Its estimated life is 6 years, and it has no salvage value. Maintenance is estimated to be $2400/year.
Operating expenses is $60/day. The constructor can hire a similar unit for $150/day. MARR is 7%
a. How many days/year must the truck’s services be needed such that the two alternatives are equally costly?
b. If the truck is needed for 180 days per year, should the contractor buy the truck or hire the similar one? Why?
Determine the dollar amount of savings generated by using the preferred alternative rather than the non preferred.