An investment Sheila is considering is a new work truck. Her old Chevy is expected to last another three years with a $2,000 repair next month. Alternatively, Sheila can sell the truck as is for $3,000 (worthless after three more years of use) and buy a used F150 for $9,000 (expected value of $3,000 at the end of three years). The new truck would be more efficient, saving Sheila an average of $100 per month on repair and fuel costs. Sheila believes she can borrow money for the new truck at an annual rate of 5%. Sheila is wondering what the pros and cons of switching trucks are, and if she should upgrade. She also wants advice on the accounting and tax treatment of a truck. Show necessary workings/calculations.

Instructions.

Present the following details in your answers. Qualitative analysis for truck options Add more description as listing Pros & Cons is not enough. It can be related to answering questions like why Sheila needs a truck after all and how buying/using old one might influence her work.

Financial analysis for truck options - You showed calculations but theres no analysis. Use the incremental analysis for this.

Make recommendation for the old or new truck options has to be based on both the qualitative and financial analysis, and this base has to be comprehensively described.