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A company needs to purchase a delivery truck. There are 2 options as shown in the following table: Truck A Truck B Initial Cost $65,000
A company needs to purchase a delivery truck. There are 2 options as shown in the following table: Truck A Truck B Initial Cost $65,000 $85,000 Useful Life Salvage Value 5 years $20,000 $25,000 Maintenance Cost realominal CFs $1,500/year in real terms $1,200/year in nominal terms 8 years Which truck should the company purchase based on their nominal EACs? Keep 2 decimal places in your calculations. You may make the following assumptions: These are the only cash flows associated with the purchase of these trucks. The company will purchase the same truck after the useful life of the previous one. The company uses a real discount rate of 10%, inflation rate 1%, and ignore any tax effect
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