Question 1 Your answer is incorrect. Try again. Snow Valley Ski Resort has been

Question

Question 1 Your answer is incorrect. Try again. Snow Valley Ski Resort has been contracting snow removal from its parking lots at a cost of $440/day. A snow-removal machine can be purchased for $28,000. The machine is estimated to have a useful life of 6 years with a zero salvage value at that time. Annual costs for operating and maintaining the equipment are estimated to be $3,250. Determine the break-even value or the number o days per year that snow remova is require in order to us purchasing the snow em o a machine. 12%/year. Break-even value Carry all interim calculations to 5 decimal places and then round your final answer up to the nearest day. The tolerance is t1. Click here to access the TVM Factor Table Calculator Click if you would like to Show Work for this question: Open Show Work days LINK TO TEXT

Explanation / Answer

Let the number of days be X

Then we must have this equality equation for break even

440*X (annual equivalent cost) = 28000(A/P, 12%, 6) + 3250

440X = 28000*0.24323 + 3250

This gives X = 23 days.

If we are using the machine for 23 days, the cost of contracting will be higher and so machine purchase will be justified.

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