with justify please 13.58 A tractor has a first cost of $40,000, a monthly op- e

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with justify please

13.58 A tractor has a first cost of $40,000, a monthly op- erating cost of $1500, and a salvage value of $12,000 in 10 years. The MARR is 12% per year. An identical tractor can be rented for $3200 per month (operating cost not included). If n is the um number of months per year the tractor minim must be used in order to justify its purchase, the relation to find n is represented by: (a) -40,000(A/P.1%, 10)-1500n (b) (c) (d) + 12,000(A/F,196,10) = 3200n -40,000(A/P.1296, 10)-1500n + 12,000(A/F1296, 10) 3200n -40,000(4/P.196, 120)-1500n + 12,000(A/F,196120) = 3200n -40,000(A/PI 1.496, 10)-1500n 12,000(A/F, 11.4%, 10) = 3200n

Explanation / Answer

Option (c).

Monthly interest rate = 12% / 12 = 1%

Number of months in 10 years = 10 x 12 = 120

Monthly worth (MW) of the purchase option ($) = - 40,000 x A/P(1%, 120) - 1,500n + 12,000 x A/F(1%,120)

For equivalence of MW, for the Lease option,

- 40,000 x A/P(1%, 120) - 1,500n + 12,000 x A/F(1%,120) = 3,200n

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