Determine the incremental benefit-cost ratio

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Reference no: EM131130916

A contractor must choose between buying or renting a crane for the duration of a 5 year construction project. The contractor uses an MARR of 8%. The crane costs $590,000 and can be sold for $350,000 after 5 years. The cost to operate and maintain the crane is $230,000 per year. Renting the crane costs $340,000 per year including all operating and maintenance costs.

A. Determine the future worth of costs (FWC) for the contractor's best option. Express your answer as a positive number is $ to the nearest $1,000.

B. Determine the incremental benefit-cost ratio that the contractor should use to decide between buying and renting. Express your answer to two decimal places.

Reference no: EM131130916

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