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An independent contractor for a transportation company needs to determine whether she should upgrade the vehicle she currently owns or trade her vehicle in to
An independent contractor for a transportation company needs to determine whether she should upgrade the vehicle she currently owns or trade her vehicle in to lease a new vehicle. If she keeps her vehicle, she will need to invest in immediate upgrades that cost $4,900 and it will cost $1,550 per year to operate at the end of year that follows. She will keep the vehicle for 4 years; at the end of this period, the upgraded vehicle will have a salvage value of $3,900. Alternatively, she could trade in her vehicle to lease a new vehicle. She estimates that her current vehicle has a trade-in value of $9,200 and that there will be $4,700 due at lease signing. She further estimates that it will cost $2,700 per year to lease and operate the vehicle. The independent contractor's MARR is 13%. Compute the EUAC of both the upgrade and lease alternatives using the insider perspective. Click here to access the TVM Factor Table Calculator. $ EUAC(keep): $ EUAC(lease)
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