. A coal stripping company currently operates three dozers for reclamation work. To reduce costs three alternatives...
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. A coal stripping company currently operates three dozers for reclamation work. To reduce costs three alternatives are being considered for the future: rebuild the present equipment, purchase new dozers and employ a contractor. Details of the alternatives are given below: Rebuild Purchase Contractor No of units required 3 2 N/A Initial cost per unit $360,000 $920,000 $0 Annual costs per unit: Maintenance $140,000 $85,000 Labour $240,000 $160,000 $2,000,000 Supplies $58,000 $42,000 Life 8 years 8 years 8 years Salvage value per unit $0 $120,000 $0 If interest is 5% annually, which alternative should be selected?
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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