An automobile leasing company has a contract with a new car dealer to do major repairs for $720 per car. The leasing company estimates that for $400,000, it could buy equipment to service their own cars at a cost of $300 per car. If the equipment will have a salvage value of 10% of its first cost after 15 years, the minimum number of cars that must require major servicing each year to justify the equipment at a MARR of 10% per year is closest to: (choose one)

(a) 88
(b)
(c) 128
(d) 143


Let x = number of cars serviced per year

-400,000(A/P,10%,15) + (0.10)(400,000) (A/F,10%,15) – 300x = 720x
-400,000(0.13147) + (0.10)(400,000) (0.03147) – 300x = -720x
420x = 51,329
x = 122 cars per year

Answer is (b) 122

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