Your company is looking at purchasing a new dump truck for $70,000. The dump truck has an hourly...

Question

Your company is looking at purchasing a new dump truck for $70,000. The dump truck has an hourly operation cost (including operator) of $45.00 per hour and a useful life of five years. At the end of five years the truck has a salvage value of $10,000. Using revenue of $60.00 per hour, 1200 billable hours per year, and a MARR of 15%, calculate the net present value for the dump truck. Should your company purchase the dump truck? Why? What is the annual equivalent for the dump truck? What is the capital recovery with return for the dump truck? What is the payback period without interest for the dump truck?

David · Accepted Answer

Question: 
Your company is looking at purchasing a new dump truck for $70,000. The dump truck has an hourly 
operation cost (including operator) of $45.00 per hour and a useful life of five years. At the end of five 
years the truck has a salvage value of $10,000. Using revenue of $60.00 per hour, 1200 billable hours per 
year, and a MARR of 15%, calculate the net present value for the dump truck. Should your company 
purchase the dump truck? Why? What is the annual equivalent for the dump truck? What is the capital 
recovery with return for the dump truck? What is the payback period without interest for the dump 
truck? 
Solution: 
Given 
Cost of Dump Truck $     70,

Your company is looking at purchasing a new dump truck for $70,000. The dump truck has an hourly operation cost (including operator) of $45.00 per hour and a useful life of five years. At the end of...

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