For the data in Problem 10-2 assume that the 5000, 10,000, and 15,000 mileage values are, respectively,

Question:

For the data in Problem 10-2 assume that the 5000, 10,000, and 15,000 mileage values are, respectively, pessimistic, most likely, and optimistic estimates. Use a weighted estimate to calculate the equivalent annual cost.

Data from Problem 10-2

The purchase of a used pickup for $9000 is being considered. Records for other vehicles show that costs for oil, tires and repairs about equal the cost for fuel. Fuel costs are $990 per year if the truck is driven 10,000 miles. The after 5 years of use drops about 8% per mile. Find the equivalent uniform annual cost if the interest rate is 8%. How much does this change if the annual mileage is 15,000? 5000?)

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...