A construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating costs. The equipment will have a 5-year life with no salvage value. Alternatively, the comÂpany can lease the equipment for $800 per day. How many days per year must the company use the equipment in order to justify its purchase at an inÂterest rate of 8% per year.
What will be an ideal response?
90,000(A/P,8%,5) + 450x = 800x
90,000(0.25046) + 450x = 800x
x = 64.4 days
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