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22) Evaluation of capital budgeting projects (15 points) A construction company is looking to buy new pickup trucks. The company owner is considering two similar
22) Evaluation of capital budgeting projects (15 points) A construction company is looking to buy new pickup trucks. The company owner is considering two similar in size models: 2019 Chevy Silverado for $35.000 or 2019 Ford F150 for $28.000. Both models will be used for 10 years, then written off (will have $0 value). The Silverado averages 28 miles/gallon. The F150 averages 20 miles/gallon. The owner anticipates the monthly truck mileage to be around 3,000 miles. All other expenses, such as maintenance, emissions, etc. are expected to be the same for both models. If the firm's weighted average cost of capital is 12% APR, truck loan payments will be made at the end of each month, and gas is expected to cost around $2.65/gallon, which truck should the owner purchase and why? Make sure to provide quantitative evidence to support your recommendation. 22) Evaluation of capital budgeting projects (15 points) A construction company is looking to buy new pickup trucks. The company owner is considering two similar in size models: 2019 Chevy Silverado for $35.000 or 2019 Ford F150 for $28.000. Both models will be used for 10 years, then written off (will have $0 value). The Silverado averages 28 miles/gallon. The F150 averages 20 miles/gallon. The owner anticipates the monthly truck mileage to be around 3,000 miles. All other expenses, such as maintenance, emissions, etc. are expected to be the same for both models. If the firm's weighted average cost of capital is 12% APR, truck loan payments will be made at the end of each month, and gas is expected to cost around $2.65/gallon, which truck should the owner purchase and why? Make sure to provide quantitative evidence to support your recommendation
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