A snow loading machine costing $30,000requires four operators at $36 per day The

Question

A snow loading machine costing $30,000requires four operators at $36 per day The machine can do the work of 50 hand shoverlers at $21 per day Fuel oill and maintenance for the machine amount to 560 per day. Assume the life of the machine is 8 vears with no salvage value. If interest on money is 6%. how many days of snow removal per year are necessary to make purchases of the machine economical?An investor is considering buying a 20-year corporate bond. The bond has a face value of S1000 and pays 6% interest per year in two semiannual payments. Thus the purchaser of the bond would receive $30 every 6 months and in addition he would receive $1000 at the end of 20 years, along with the last $30 interest pay ment. If the investor thought he should receive 8% interest, compounded semiannually, how much would he be willing to pay for the bond?

Explanation / Answer

4. Annual worth of initial cost = 30000(A/P,6,8) = 4831.08

benefits per day= 50*21-4*36-60 = 846

So minimum number of days of work for machine to be economical per year = 4831.08/876 = 6 days

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