A contractor estimates maintenance costs for a new backhoe

A contractor estimates maintenance costs for a new backhoe

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A contractor estimates maintenance costs for a new backhoe to be $275 for the first month with a monthly increase of 0.5%. The contractor can buy a 4 year maintenance contract for $18,500 at any point. If the contract is purchased at the same time as the backhoe is purchased the dealer has offered a 10% discount. Use i=0.75% per month. What should the contractor do?

Reference no: EM13688879

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