A regional infrastructure building and maintenance contractor is trying to decide whether to buy a new compact

Question:

A regional infrastructure building and maintenance contractor is trying to decide whether to buy a new compact horizontal directional drilling (HDD) machine now or wait to buy it 2 years from now (when a large pipeline contract will require the new equipment). The HDD machine will include an innovative pipe loader design and maneuverable undercarriage system. The cost of the system is $68,000 if purchased now or $81,000 if purchased 2 years from now. At a real MARR of 10% per year and an inflation rate of 5% per year, determine if the company should buy now or later

(a) Without any adjustment for inflation

(b) With inflation considered.

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...