Determine the annual equivalent for Problem 5. Should your company purchase the dump truck?
In Problem 5, your company is looking at purchasing a dump truck at a cost of $65,000. The truck would have a useful life of five years. At the end of the fifth year the salvage value is estimated to be $10,000. The dump truck could be billed out at $55.00 per hour and costs $13.00 per hour to operate. The operator costs $22.00 per hour. Using 1,000 billable hours per year determine the net present value for the purchase of the dump truck using a MARR of 18%. Should your company purchase the dump truck?