A construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating

Question:

A construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating costs. The equipment will have a 5 year life with no salvage value. Alternatively, the company can lease the equipment for $800 per day. How many days per year must the company use the equipment in order to justify its purchase at an interest rate of 8% per year.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...

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