A pipeline contractor can purchase a needed truck for $35,000. Its estimated life is 6 years, and it has no salvage value. Maintenance is estimated to be $3,100 per year. Operating expense is $60 per day. The contractor can hire a similar unit for $160 per day. MARR is 7%.

How many days per year must the truck’s services be needed such that the two alternatives are equally costly?

XXX days?

If the truck is needed for 180 days/year, should the contractor buy the truck or hire the similar unit?

Buy or hire the similar unit?

Determine the dollar amount of annual savings generated by using the preferred alternative rather than the nonpreferred.

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