(Solution) - An irrigation canal contractor wants to determine whether he sho -(2025 Original AI-Free Solution)

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An irrigation canal contractor wants to determine whether he should purchase a used Caterpillar mini excavator or a Toro powered rotary tiller for servicing irrigation ditches in an agricultural area of California. The initial cost of the excavator is $26,500 with a $9000 salvage value after 10 years. Fixed costs for insurance, license, etc. are expected to be $18,000 per year. The excavator will require one operator at $15 per hour and maintenance at $1 per hour. In 1 hour, 0.15 mile of ditch can be prepared. Alternatively, the contractor can purchase a tiller and hire 2 workers at $11 per hour each. The tiller costs $1200 and has a useful life of 5 years with no salvage value. Its operating cost is expected to be $1.20 per hour, and with the tiller, the two workers can prepare 0.04 mile of ditch in 1 hour. The contractor's MARR is 10% per year. Determine the number of miles of ditch per year the contractor would have to service for the two options to break even.