Question
15. Use the Following Information to Answer the Questions Below Our Business is making a Decision Today for the Next 5 years, to Either Keep
15. Use the Following Information to Answer the Questions Below
Our Business is making a Decision Today for the Next 5 years, to Either Keep our OLD Truck or to Purchase a NEW Truck.
Our Business has the Following Information to Consider in making the Decision;
OLD TRUCK Costs and Benefits
The Cost of the Old Truck was $100,000 and will last for another 5 Years
Maintenance on the Old Truck is $11,000 per year
Gas to Run the Old Truck is $12,000 per Year
The Old Driver is paid $35,000 per Year
The Old Truck Could be sold today for $35,000
The Old Truck can be sold in 5 years for $10,000
The Old Truck Insurance Costs are $6,000 per Year
NEW TRUCK Costs and Benefits
The Cost of the New Truck would be $200,000 and will last for 5 years.
The new Truck can be sold in 5 years for $55,000
The Maintenance of the New Truck would be Zero for the First 3 years and then $7,000 per year after
The Gas Cost of the New Truck is $9,000 per year
The New Driver is paid $30,000 per year
New Truck Insurance Costs are $5,000 per Year
1. Compute the Total NET Relevant (Cost) or Benefit to Keep the Old Truck
2. Compute the Total NET Relevant (Cost) or Benefit to Buy the New Truck
3. Compute the Dollar Benefit to your Decision
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