An equipment rental firm purchased a new scissor lift to add to its rental fleet

Question

An equipment rental firm purchased a new scissor lift to add to its rental fleet. The scissor lift cost $22, 000 and is expected to have a useful life of 5 years. The salvage value at the end of the lift's useful life is estiamted to be $2, 000. Maintenance and ownership costs for the lift are estimated to be $10 per hour rented, and the lift is expected to rented for 800 hours per year. Using an MARR of 7%, determine the lowest rental rate that the company should use. Express your answer in $/hr to the nearest cent.

Explanation / Answer

P/(1+i)N=FV

22000/(1+0.07)5 =15714

The lift works for 800 hours for $ 10/ hr = 800/10 = $ 80 for the year .

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