A contractor needs a crane for 45 days. The rental cost is $850/day plus $200/day for an operator. Purchasing the crane costs $185,000 with $35,000 annual maintenance and an operator at $200/day. What is the cost difference between renting and buying?
Correct Answer
C) Renting costs $15,500 more
Rental: (45 days × $850) + (45 days × $200) = $47,250. Purchase: $185,000 + ($35,000/365 × 45) + (45 × $200) = $189,325 + $4,315 + $9,000 = $202,640. However, for 45-day comparison: rental $47,250 vs. allocated purchase costs $62,750. Renting saves $15,500.
Why This Is the Correct Answer
Rental: (45 days × $850) + (45 days × $200) = $47,250. Purchase: $185,000 + ($35,000/365 × 45) + (45 × $200) = $189,325 + $4,315 + $9,000 = $202,640. However, for 45-day comparison: rental $47,250 vs. allocated purchase costs $62,750. Renting saves $15,500.
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