Business, 06.04.2021 02:10 brain9787

A regional infrastructure building and maintenance contractor must decide to buy a new compact horizontal directional drilling (HDD) machine now, or wait and buy it 2 years from now when a large pipeline contract will require the new equipment. The HDD machine will include an innovative pipeloader design and a maneuverable undercarriage system. The cost of the system is $67,300 if purchased now or an estimated $81,300 if purchased 2 years from now. At i =10% per year and f =5% per year. Determine if the contractor should buy now or later (a) without any adjustment for inflation, and (b) with inflation considered.

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