An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a rental option that will cost $18,000 per year. In addition, an extra $16.5 per hour labor cost will be incurred for operating the rented equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 75 days per year? The MARR is 11% per year. The annual worth of plan 1 lease optimistic is $ The annual worth of plan 1 most likely is $ The annual worth of plan 1 pessimistic is $ The annual worth of plan 2 rental is $ Plan 1 lease optimistic is better Plan 1 most likely is better Plan 1 lease pessimistic is better ✓than rental of plan 2. ✓than rental of plan 2. than rental of plan 2.
An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a rental option that will cost $18,000 per year. In addition, an extra $16.5 per hour labor cost will be incurred for operating the rented equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 75 days per year? The MARR is 11% per year. The annual worth of plan 1 lease optimistic is $ The annual worth of plan 1 most likely is $ The annual worth of plan 1 pessimistic is $ The annual worth of plan 2 rental is $ Plan 1 lease optimistic is better Plan 1 most likely is better Plan 1 lease pessimistic is better ✓than rental of plan 2. ✓than rental of plan 2. than rental of plan 2.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of
equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per
metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a
rental option that will cost $18,000 per year. In addition, an extra $16.5 per hour labor cost will be incurred for operating the rented
equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 75 days per year? The
MARR is 11% per year.
The annual worth of plan 1 lease optimistic is $
The annual worth of plan 1 most likely is $
The annual worth of plan 1 pessimistic is $
The annual worth of plan 2 rental is $
Plan 1 lease optimistic is better
Plan 1 most likely is better
Plan 1 lease pessimistic is better
✓than rental of plan 2.
than rental of plan 2.
than rental of plan 2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fefcee9d2-dcfb-4192-b098-9d16d8cb4da2%2F045ee8bd-dedd-4353-9904-1392073b9878%2F97jejs_processed.png&w=3840&q=75)
Transcribed Image Text:An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of
equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per
metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a
rental option that will cost $18,000 per year. In addition, an extra $16.5 per hour labor cost will be incurred for operating the rented
equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 75 days per year? The
MARR is 11% per year.
The annual worth of plan 1 lease optimistic is $
The annual worth of plan 1 most likely is $
The annual worth of plan 1 pessimistic is $
The annual worth of plan 2 rental is $
Plan 1 lease optimistic is better
Plan 1 most likely is better
Plan 1 lease pessimistic is better
✓than rental of plan 2.
than rental of plan 2.
than rental of plan 2.
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