A contractor has to choose one of the
Chapter , Problem 12-59(choose chapter or problem)
A contractor has to choose one of the followingalternatives in performing earthmoving contracts:A.Buy a heavy-duty truck for $35,000. Salvagevalue is expected to be $8000 at the end of thevehicles 7-year depreciable life. Maintenanceis $2500 per year. Daily operating expenses are$200.B.Hire a similar unit for $550 per day.Based on a 10% after-tax rate of return, how manydays per year must the truck be used to justify itspurchase? Base your calculations on straight- linedepreciation and a 50% income tax rate.
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