Your company needs to purchase a new dozer and there are two options to choose from:...

 

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Your company needs to purchase a new dozer and there are two options to choose from: Dozer 1 costs $102,000 and costs $28.00 per hour to operate and a $39,000 salvage value. Dozer 2 costs $70,000 and costs $34.00 per hour to operate with a salvage value for Dozer 2 equal to 20% of the purchase price. For each Dozer, the operator costs $18.00 per hour & the revenue (the amount you can charge for this service) is $83.00 per hour. Using a useful life of 4.5 years, 1,200 billable hours, and a MARR of 20% for both Dozers, calculate the NPV for dozer 1. Your company needs to purchase a new dozer and there are two options to choose from: Dozer 1 costs $102,000 and costs $28.00 per hour to operate and a $39,000 salvage value. Dozer 2 costs $70,000 and costs $34.00 per hour to operate with a salvage value for Dozer 2 equal to 20% of the purchase price. For each Dozer, the operator costs $18.00 per hour & the revenue (the amount you can charge for this service) is $83.00 per hour. Using a useful life of 4.5 years, 1,200 billable hours, and a MARR of 20% for both Dozers, calculate the NPV for dozer 2. Your company needs to purchase a new dozer and there are two options to choose from: Dozer 1 costs $102,000 and costs $28.00 per hour to operate and a $39,000 salvage value. Dozer 2 costs $70,000 and costs $34.00 per hour to operate with a salvage value for Dozer 2 equal to 20% of the purchase price. For each Dozer, the operator costs $18.00 per hour & the revenue (the amount you can charge for this service) is $83.00 per hour. Using a useful life of 4.5 years, 1,200 billable hours, and a MARR of 20% for both Dozers, calculate the NPV for dozer 1. Your company needs to purchase a new dozer and there are two options to choose from: Dozer 1 costs $102,000 and costs $28.00 per hour to operate and a $39,000 salvage value. Dozer 2 costs $70,000 and costs $34.00 per hour to operate with a salvage value for Dozer 2 equal to 20% of the purchase price. For each Dozer, the operator costs $18.00 per hour & the revenue (the amount you can charge for this service) is $83.00 per hour. Using a useful life of 4.5 years, 1,200 billable hours, and a MARR of 20% for both Dozers, calculate the NPV for dozer 2.

Answer rating: 100% (QA)

To calculate the Net Present Value NPV for Dozer 1 we need to determine the cash flows associated with the dozer over its useful life and discount the... View the full answer