question archive A road building contractor has received a major highway construction contract that will require 50,000 m3 of crushed stone each year for 5 years
A road building contractor has received a major highway construction contract that will require 50,000 m3 of crushed stone each year for 5 years
Subject:EconomicsPrice: Bought3
A road building contractor has received a major highway construction contract that will require 50,000 m3 of crushed stone each year for 5 years. The needed stone can be obtained from a quarry for $5.80/m3 as an alternative, the contractor has decided to try and purchase the quarry. He believes that if he owned the quarry, the stone would only cost him $4.301m3. He thinks he could resell the quarry at-the end of 5 years for $40,000. If the contractor uses a 10% interest rate, how much would he be willing to pay for the quarry?
