You run a construction company. You need to lease a crane for a two-year project. There...

Transcribed Image Text:

You run a construction company. You need to lease a crane for a two-year project. There are two suppliers which can supply a suitable crane. The first, Acme Cranes, will cost $60,000 immediately and $50,000 in a year. At the end of the rental in two years Acme will give back $11,000 if the crane is in good shape. The second company, Bobco Rentals, will cost $65,000 immediately and $55,000 in a year. At the end of the rental in two years Bobco will give back $22,000 if the crane is in good shape. If money is valued at 11% simple and using today as your comparison date, which company has the lower cost? Assume the crane will be returned in good shape. Acme has the lower cost $96,028.99 You run a construction company. You need to lease a crane for a two-year project. There are two suppliers which can supply a suitable crane. The first, Acme Cranes, will cost $60,000 immediately and $50,000 in a year. At the end of the rental in two years Acme will give back $11,000 if the crane is in good shape. The second company, Bobco Rentals, will cost $65,000 immediately and $55,000 in a year. At the end of the rental in two years Bobco will give back $22,000 if the crane is in good shape. If money is valued at 11% simple and using today as your comparison date, which company has the lower cost? Assume the crane will be returned in good shape. Acme has the lower cost $96,028.99