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 $5,000 and it will cost $1,350 per year to operate at the end of year that follows. She will keep the vehicle for 5 years; at the end of this period, the upgraded vehicle will have a salvage value of $3,700. Alternatively, she could trade in her vehicle to lease a new vehicle. She estimates that her current vehicle has a trade-in value of $10,100 and that there will be $4,500 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 10%. Compute the EUAC of both the upgrade and lease alternatives using the insider perspective.

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EUAC(keep):	$L1
EUAC(lease):	$L2

Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance is 5.

Which alternative would you recommend to the independent contractor?

L3 Trade in her vehicle and lease a new oneEither alternative is fineUpgrade her current vehicle