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Engineering, 01.12.2021 01:00 sruthivada

Contractor A is trying to decide whether it should purchase or lease new earth-moving equipment. If purchased, the equipment will cost $175,000 and is expected to be used six years at which time it can be sold for $72,000. At the midpoint of its life (year 3) an overhaul costing $20,000 must be performed. The equipment can be leased for $30,000 per year. Contractor A will not be responsible for the mid-life over haul if the equipment is leased. If the equipment is purchased it will be leased to other companies whenever possible; this is expected to yield revenues of $15,000 per year. The annual operating cost regardless of the decision will be approximately equal. What would you recommend in the MARR is 6%?

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Contractor A is trying to decide whether it should purchase or lease new earth-moving equipment. If...
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