Ramsis is a beavy equipment rental company. It is considering the purchase of Tower crane at a price of BD 775,000. This crane is expected to operate for 12 years before retirement with no salvage value at the end. The company is planning to rent the crane for BD 108,000 per year starting year 2 and the rental increases by 10% thereafter Cost of this maintenance is expected to be BD 15,000 each year a ) What is the discounted payback period, if the MARR 8 % per year? b ) In your engineering analysis study, which method would you select ( Payback or Present worth) to solve this problem? And why?
Ramsis is a beavy equipment rental company. It is considering the purchase of Tower crane at a price of BD 775,000. This crane is expected to operate for 12 years before retirement with no salvage value at the end. The company is planning to rent the crane for BD 108,000 per year starting year 2 and the rental increases by 10% thereafter Cost of this maintenance is expected to be BD 15,000 each year a ) What is the discounted payback period, if the MARR 8 % per year? b ) In your engineering analysis study, which method would you select ( Payback or Present worth) to solve this problem? And why?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Ramsis is a beavy equipment rental company. It is considering the purchase of Tower crane at a price of BD 775,000. This crane is expected to operate for 12 years before retirement with no salvage value at the end. The company is planning to rent the crane for BD 108,000 per year starting year 2 and the rental increases by 10% thereafter Cost of this maintenance is expected to be BD 15,000 each year
a ) What is the discounted payback period, if the MARR 8 % per year?
b ) In your engineering analysis study, which method would you select ( Payback or Present worth) to solve this problem? And why?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education