The Sheila Cabot Construction Company (SCCC) is building a local stadium. They need an office at the stadium site. SCCC can build the office themselves with material costing $50,000 and labor costs of $13,000. When the company takes apart the building at the end of the project, 20% of the material would be reusable. Alternatively, SCCC can rent a pre-fabricated building at a cost of $1000 per month with no set-up or dismantling costs. It will benefit SCCC to build the office if it expects the stadium project to exceed
A) 36 months
B) 50 months
C) 53 months
D) 63 months

Question

Quizplus · Accepted Answer

The total cost to build the office is $63,000, with 20% of the material cost ($10,000) being reusable, resulting in a net cost of $53,000. Renting costs $1,000 per month, so dividing $53,000 by $1,000 gives 53 months as the breakeven point.

The Sheila Cabot Construction Company (SCCC) Is Building a Local