It is decided that a farm is going to be cultivated by a tractor. Two competitive tractors
Question:
The MARR is 10% per year and the diesel needed to fuel the tractor costs $0.2 per horse power.
a. At what level of operation (hours per year) would you be indifferent between the two tractors? If the cultivating system is expected to operate 2,500 hours in a year, which tractor should be recommended?
b. Perform a sensitivity analysis on the efficiency of tractor A. Over what range of cultivating efficiency is tractor A preferred to tractor B? Assume 250 hours of operation per year, and draw a graph to illustrate your answer.
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...
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Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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