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A company uses several narrow aisle forklifts and can purchase them in three types. Type 1 costs $20,000 each; type 2 costs $10,000 each; and

A company uses several narrow aisle forklifts and can purchase them in three types. Type 1 costs $20,000 each; type 2 costs $10,000 each; and type 3 costs $5,000 each. Such equipment can be sold at the end of its useful life (10 years) for 15 percent of its original cost. The annual operating costs for each type of equipment are $2,500, $2,000, and $3,000, respectively, per truck. 3 Type 1 units can do the work of 5 Type 2 units or 7 Type 3 units. If investments are to return 15% before taxes per truck, which equipment would be the best purchase?

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