Digger for it to be an economically viable alternative

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Reference no: EM131838855

A foundation contractor needs to purchase a new piece of drilling equipment. Two alternatives are available. The price for a Beaver machine is $50,000. The Beaver has a life of 10 years and its drill bits need to be replaced every 5 years at a cost of $10,000. The Digger machine's life is 15 years and it does not require any replacement parts. Neither machine is expected to have a salvage value at the end of its life. If your minimum acceptable rate of return (MARR) is 10%, what should you be willing to pay for the Digger for it to be an economically viable alternative?

Reference no: EM131838855

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