Question
A construction company considers to renew its truck fleet. The model that the company considers cost $70,000 and has a useful life of nine years.
A construction company considers to renew its truck fleet. The model that the company considers cost $70,000 and has a useful life of nine years. The operating cost of the truck is $0.05/mile+$3,000 in the initial year, which are expected to increase by 3% every year in the following years.The salvage value at the end of nine years of service is $10,000. Each truck is planned to be driven 10,000 miles every year and the company's MARR is 14%. Determine the equivalent annual cost of owning and operating the model under consideration.
A) $3,852
B) $18,003
C) $17,382
D) Answers A, B and C are not correct
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