Your company needs to purchase a track hoe and has narrowed the selection to two pieces of

Question:

Your company needs to purchase a track hoe and has narrowed the selection to two pieces of equipment. The first track hoe costs $100,000 and has an hourly operation cost of $31.00 and a useful life of four years. At the end of four years its is $20,000. The second track hoe costs $65,000 and has an hourly operation cost of $36.00 and has a useful life of three years. At the end of three years its is $10,000. The operator cost is $29.00 per hour. The revenue from either track hoe is $95.00 per hour. Using 1,200 billable hours per year and a of 20%, calculate the for both track hoes. Assume that each option is repurchased until their useful lives end in the same year. Which track hoe should your company choose?

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