Construction equipment for grading with a purchase price

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Reference no: EM131050065

A general contractor is buying construction equipment for grading with a purchase price of $140,000. The salvage price after 5 years is $16,000. The expected monthly benefit is $3,400. The dealership offered him to buy additional equipment with a total discount of 10% for both equipment purchase price. The salvage price of the second equipment is same as that for the first equipment. The expected monthly benefit of the second equipment is $2,380. The cost of the loan to buy the equipment is 4.5% while the MARR is equal to 6%. Since the contractor needs at least one equipment, advise the contractor to buy/not to buy the second equipment.

Reference no: EM131050065

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