A four-year-old truck has a present net realizable value of $6,000 and is now expected to have a market value of $1,800 after its remaining three-year life. Its operating disbursements are expected to be S720 per year. An equivalent truck can be leased for $0.45 per mile plus $35 a day for each day the truck is kept. The expected annual utilization is 3,000 miles and 30 days. The effective income tax rate is 40%, the present book value is 4.750 and the depreciation charge is $1 000 per year if the firm continues to own the truck. If any gains or losses on disposal of the old truck affect taxes at the full 40% rate, and the after-tax MARR is 4%, find which alternative is better by comparing after-tax equivalent PWs a. using only the preceding information; b. using further information that the annual cost of having to operate without a truck is $2,250 a. The after-tax PW for keeping the old truck is $ The after-tax PW for leasing a truck is $ Which alternative is better? Choose the correct answer below. Round to the nearest dollar.) Round to the nearest dollar.) O Keep old Lease b. The after-tax PW for operating without a truck is $ (Round to the nearest dollar.) Which alternative is better? Choose the correct answer below. Operate without truck Lease A four-year-old truck has a present net realizable value of $6,000 and is now expected to have a market value of $1,800 after its remaining three-year life. Its operating disbursements are expected to be S720 per year. An equivalent truck can be leased for $0.45 per mile plus $35 a day for each day the truck is kept. The expected annual utilization is 3,000 miles and 30 days. The effective income tax rate is 40%, the present book value is 4.750 and the depreciation charge is $1 000 per year if the firm continues to own the truck. If any gains or losses on disposal of the old truck affect taxes at the full 40% rate, and the after-tax MARR is 4%, find which alternative is better by comparing after-tax equivalent PWs a. using only the preceding information; b. using further information that the annual cost of having to operate without a truck is $2,250 a. The after-tax PW for keeping the old truck is $ The after-tax PW for leasing a truck is $ Which alternative is better? Choose the correct answer below. Round to the nearest dollar.) Round to the nearest dollar.) O Keep old Lease b. The after-tax PW for operating without a truck is $ (Round to the nearest dollar.) Which alternative is better? Choose the correct answer below. Operate without truck Lease
