11-4. A firm is trying to decide between two types of trucks, one a conventional gasoline vehicle...

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11-4. A firm is trying to decide between two types of trucks, one a conventional gasoline vehicle and the other a diesel powered. The following information is available. (11.2) Gasoline Diesel Initial investment $27,000 $21,000 Useful life 4 years 3 years Salvage value $9,000 $6,000 Operating cost per mile $0.42 $0.36

a. With interest at 5% per year, determine the annual mileage at which the two trucks are equivalent.

b. For 15,000 miles per year in travel, which truck should be recommended?

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Ali Khawaja

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