Arnold Inc. is considering the purchase of a new truck. It can choose between two brands.

Brand A: buying the new truck for $120,000. This brand-A truck lasts for (7 + A) years (A: the remainder of division of the last two digit of your student ID divided by 3) and save the company $50,000 a year in expenses (before tax).

Brand B: buying the new truck for $80,000. This brand-B truck lasts for (5 + A) year (A: the remainder of division of the last two digit of your student ID divided by 3) and save the company $40,000 a year in expenses (before tax).

The opportunity cost of capital is 12% and the firms tax rate is 35%. Assume that the company will replace the truck at the end of its life. The company uses straight-line depreciation. Which brand should the company choose for the new truck?

Arnold Inc. is considering the purchase of a new truck. It can choose between two brands. Brand A: buying the new truck for $120,000. This brand-A truck lasts for 8 years and save the company $50,000 a year in expenses (before tax). Brand B: buying the new truck for $80,000. This brand-B truck lasts for 6 year and save the company $40,000 a year in expenses (before tax). The opportunity cost of capital is 12% and the firm's tax rate is 35%. Assume that the company will replace the truck at the end of its life. The company uses straight-line depreciation. Which brand should the company choose fo the new truck