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
I can sell the Old Truck 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 -
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started