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A truck was purchased four years ago for $65,000 to move raw materials and finished goods between a production facility and four remote warehouses. This
A truck was purchased four years ago for $65,000 to move raw materials and finished goods between a production facility and four remote warehouses. This truck (the defender) can be sold at the present time (EOY O) for $40,000 and replaced by a new truck (the challenger) with a purchase price of $68,000. Because of changing demand for the product produced at the facility, the owners of the firm plan to cease operations in 3 years. Given the above cost information and an MARR of 10% APR, answer the following. (If required, answer these questions to the nearest dollar. Use percentages to 3 decimal places. Algebraic signs matter.) a. What is the absolute value of the TAW for the defender at EOY 2? (3) dollars/yr. b. What is the absolute value of the TAW for the challenger at EOY 2? (O dollars/yr. c. Given the study period, T is only 3 years, what is the best economic choice for the firm? Keep the defender for 4 years Replace the defender in 1 year and replace it with the challenger for 2 years Replace the defender now with the challenger for 3 years Keep the defender for 2 years and replace it with the challenger for 1 year O d. What is the basis for the choice in part c? TAW for the challenger in EOY 3 is \$-25,456. Likely FW of the best combination is greater than 0. PW for the best possible combination over the study period, T is about $58,133. None of these answers are correct. 0
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