A project requires specialized equipment costing $2,800 per week to rent. The equipment will be needed for 8 weeks, but the rental company offers a 12-week rate of $2,400 per week. The contractor has potential use for the equipment on another project starting in 10 weeks. What is the most cost-effective approach?
Correct Answer
D) Rent for 8 weeks at standard rate: $22,400
8 weeks at $2,800 = $22,400. 12 weeks at $2,400 = $28,800. The standard 8-week rental is $6,400 less expensive. Even with future use, the contractor should evaluate that project separately when it occurs.
Why This Is the Correct Answer
8 weeks at $2,800 = $22,400. 12 weeks at $2,400 = $28,800. The standard 8-week rental is $6,400 less expensive. Even with future use, the contractor should evaluate that project separately when it occurs.
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