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What must be the minimum number of days per year

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Question - An Engineering Firm needs additional equipment for the completion of its project. The first alternative is to purchase a brand new equipment worth P1,500,000 with P400,000 salvage value at the end of its 15-year life. Daily operating cost using this equipment is P500. Second alternative is to rent another equipment for P1,500 per day. What must be the minimum number of days per year the equipment will be used so that purchasing this new equipment is more economical than renting another if interest rate is 18%.

Reference no: EM132991267

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