Test $3; Question 200

Discussion in 'PMP' started by Sajid Amin, Sep 16, 2020.

  1. Sajid Amin

    Sajid Amin Active Member

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    Hello, can someone please explain how the correct answer is C? Why is the daily operation cost not being added to the rental? It doesn't say anywhere in the question that the daily operating cost is included in the $250 per day rental cost.

    You are managing a construction project. You have to decide between renting a digger or buying it for the project. You would require the digger for 7 days of work and the following are the costs involved. Cost of digger is $1,400, daily cost of operation = $50, daily rental of the digger= $250. Which of the following is true?

    SELECT THE CORRECT ANSWER

    A) It is more economical to buy the digger
    B) It is more economical to take the digger on rent
    C) Both are equally economical
    D) Can't determine with the limited data
    Correct Option - C

    EXPLANATION

    Both are equally economical. Buying option: Cost of digger+(7days*daily cost of operation)=$1400+(7*$50)=$1750. Renting the digger= 7days*daily rental=7*$250=$1750. So both are equal.
     
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  2. tim jerome

    tim jerome Well-Known Member
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    Rental costs cover items like the oil the digger burns through as you maintain it during the rental period, and ongoing maintenance / tuning and other issues that owning a digger may have to assume. The function of the digger is the responsibility of the owner.

    You're right; it doesn't say anywhere that operational costs are covered in the rental contract. In the real world, ALL costs would be considered for such a cost-benefit comparison. For this question, only the extra details and the optional answers provide any context.
     
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  3. Sajid Amin

    Sajid Amin Active Member

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    Thanks for the explanation, Tim.
     
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