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A construction company is investigating the purchase of a new dump truck. Interest is 9%. The cash flows for two likely models are as follows:

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A construction company is investigating the purchase of a new dump truck. Interest is 9%. The cash flows for two likely models are as follows: Using present worth analysis, decide which truck the firm should buy and why. MODEL FIRST COST ANNUAL INCOME SALVAGE VALUE LIFE (YEARS) ANNUAL OPERATING COST $ 2,000 $1,000 A B $ 50,000 $ 80,000 $ 9,000 $ 12,000 $ 10,000 $ 30,000 10 10

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