BCN3753 Florida Financial Management of Construction Organizations Paper 4

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Florida International University BCN3753- Financial Management of Construction Organization In-class Exercise #4 Fall 2019 In-Class Exercise #4 (Multiple Payment Cash Flow Analysis Part II) Question 1 Your company is planning to purchase a new loader for $18,000. If the company keeps the old loader, it will have $1,500 additional maintenance cost for the first year and increases $500 each year till the eighth year. Given the company’s minimum attractive rate of return (MARR) is 8%, should the company make the purchase or keep the old one? In-Class Exercise #4 Page 1 of 2 Florida International University BCN3753- Financial Management of Construction Organization In-class Exercise #4 Fall 2019 Question 2 A contractor estimates maintenance costs for a new backhoe to be $275 for the first month with a monthly increase of 0.5%. The contractor can buy a 4-year maintenance contract for $15,500 at the same time as the backhoe is purchased with a 20% discount. Use i =0.75% per month. What should the contractor do? In-Class Exercise #4 Page 2 of 2 ...
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