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Your company needs to purchase an excavator and has narrowed the selection to two models....

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Accounting

Your company needs to purchase an excavator and has narrowed the selection to two models. Model A costs $250,000 and has a useful life of six years. This excavator can be billed out at $200 per hour and has an hourly operation cost of $110. At the end of six years, the excavator has a salvage value of $45,000. Model B costs $100,000 and has a useful life of four years. It can be billed out at $105.00 per hour and has an hourly operation cost of $33.00. At the end of four years, the track hoe has a salvage value of $20,000. The operator cost for either model is $40 per hour. Using a MARR of 10%, 1,500 billable hours, and the AE method, which model should your company buy?

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