Problem 7-69
Question Description
A state’s department of transportation (DOT) is consideringwhether to buy or lease an RFID tracking system for asphalt,concrete, and gravel trucks to be used in road paving. Purchasingthe RFID system will cost $5000 per truck, with a salvage value of$1500 after the RFID system’s useful life of 5-years. However, theDOT considering this purchase is also looking at leasing the sameRFID system for an annual payment of $3500, which includes a fullreplacement warranty. Assuming that the MARR is 11% and on thebasis of an internal rate of return analysis, which alternativewould you advise the DOT to consider? Analyze incrementally usingrate of return. Analyze incrementally using rate of return. Thenumber of trucks used in a season varies from 5000 to 7500. Doesthis matter? (USE AN EXCEL SPREADSHEET TO SOLVE)
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