PGMP · Question #375
You are the owner of a house painting company. You occasionally have the need for an automated paint sprayer. This tool sells for $1250 US and would cost $20 a day to maintain. You can rent one for…
The correct answer is C. Ten days. This is a make-or-buy (break-even) calculation. Set the total cost of buying equal to the total cost of renting: Buy cost = $1,250 (purchase) + $20/day × d (maintenance). Rent cost = $150/day × d. Setting them equal: 1,250 + 20d = 150d → 1,250 = 130d → d = 9.615 days. Rounding…
Question
You are the owner of a house painting company. You occasionally have the need for an automated paint sprayer. This tool sells for $1250 US and would cost $20 a day to maintain. You can rent one for $150 a day with maintenance included. How many days would you need to use this tool before it would make sense to buy the tool instead of rent?
Options
- ATwelve days
- BSix days
- CTen days
- DEight days
How the community answered
(60 responses)- A7% (4)
- B13% (8)
- C77% (46)
- D3% (2)
Explanation
This is a make-or-buy (break-even) calculation. Set the total cost of buying equal to the total cost of renting: Buy cost = $1,250 (purchase) + $20/day × d (maintenance). Rent cost = $150/day × d. Setting them equal: 1,250 + 20d = 150d → 1,250 = 130d → d = 9.615 days. Rounding up, at 10 days the purchase cost ($1,250 + $200 = $1,450) is less than the rental cost (10 × $150 = $1,500), making buying the better option starting at day 10. Below 10 days, renting is cheaper.
Topics
Community Discussion
No community discussion yet for this question.