Find the breakeven point for labor hours per day

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Reference no: EM131102651

A large city in the mid-West needs to acquire a street-cleaning machine to keep its roads looking nice year round.

A used cleaning vehicle will cost $75,000 and have a $20,000 market (salvage) value at the end of its five-year life.

A new system with advanced features will cost $150,000 and have a $50,000 market value at the end of its five-year life.

The new system is expected to reduce labor hours compared with the used system. Current street-cleaning activity requires the used system to operate 8 hours per day for 20 days per month. Labor costs $40 per hour (including fringe benefits), and MARR is 12% per year compounded monthly.

Find the breakeven point for labor hours per day.

Reference no: EM131102651

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