In the choice of mechanical equipment you are required to submit your recommendation as to which of the two steam shovels for earth excavation is better to buy. The basis is 20 year service & interest at 7%. Taxes & insurance are the same in each case: 5% & 1% respectively. Use Annual Cost & CC. 50-ton shovel 70 ton shovel P38k 20 years P3k First Cost Life Salvage value Annual Operation Annual Upkeep Annual Output P30k 20 years P2k P15k P1.5k 150k yards P17k P2k 200k yards

In the choice of mechanical equipment you are required to submit your recommendation as to which of the two steam shovels for earth excavation is better to buy. The basis is 20 year service & interest at 7%. Taxes & insurance are the same in each case: 5% & 1% respectively. Use Annual Cost & CC. 50-ton shovel 70 ton shovel P38k 20 years P3k First Cost Life Salvage value Annual Operation Annual Upkeep Annual Output P30k 20 years P2k P15k P1.5k 150k yards P17k P2k 200k yards

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 18E

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