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AAA Company, a contractor, specializes in handling emergency service calls. The company currently own five Ford panel trucks to cover the Annapolis area. The Ford
AAA Company, a contractor, specializes in handling emergency service calls. The company currently own five Ford panel trucks to cover the Annapolis area. The Ford truck has the following characteristics:
All cost is in constant dollars. The contractor wishes to know when the trucks should be replaced with an identical model. The company opportunity cost of capital before taxes is 20 percent. No taxes are to be considered.
\begin{tabular}{|c|c|c|c|c|} \hline Life & First Cost & Operational Cost & Maintenance Cost & Salvage Value \\ \hline 0 & $15.000 & & & \\ 1 & & 2.000 & 800 & 11.000 \\ 2 & & 2.000 & 1.850 & 9.000 \\ 3 & & 2.000 & 2.900 & 7.000 \\ 4 & & 2.000 & 3.950 & 5.500 \\ 5 & & 2.000 & 5.000 & 3.800 \\ 6 & & 2.000 & 6.050 & 2.500 \\ \hline \end{tabular}
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