Purchasing a new piece of construction equipment

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Reference no: EM13832538

A contractor is looking at purchasing a new piece of construction equipment. He can either buy it now or two years from now. The cost is $68,000 if purchased now. If purchased in two years, it will cost $81,000. Assume i = 10%/year and inflation f = 5%/year. Should he purchase now, or in two years? Consider this problem both without adjusting for inflation, and then with adjusting for inflation.

Reference no: EM13832538

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