A manufacturing plant is analyzing whether or not to buy or


A manufacturing plant is analyzing whether or not to buy or lease a new compact crane for hard-to-reach locations. If purchased the compact crane will cost $175,000 and is expected to last 6 years at which time it can be sold for $72,000. At the mid-point of its life (Year 3), an overhaul costing $20,000 must be performed. The compact crane, alternatively, can be leased for $30,000 per year. AJAX will not be responsible for the mid-life overhaul if the compact crane is leased. If the equipment is purchased, it is estimated that it can be rented to other close-by manufacturers whenever possible. Leasing to other manufacturers is expected to yield net revenues of $15,000 per year. The annual operating cost regardless of buy or lease will be approximately equal. What would you recommend if the MARR is 6%?

Request for Solution File

Ask an Expert for Answer!!
Financial Management: A manufacturing plant is analyzing whether or not to buy or
Reference No:- TGS02361880

Expected delivery within 24 Hours