Question
Consider the following two tractors a company can purchase. The following tables provide the costs the company will incur (in thousands of dollars) in the
- Consider the following two tractors a company can purchase. The following tables provide the costs the company will incur (in thousands of dollars) in the lifetime of each tractor.
The transportation firm can only afford one of the tractors. The two tractors have identical production capabilities. The firm's cost of capital is 3%.
a.Find the present value of the costs of using the two tractors.
Diesel=?
Gasoline=?
b. Based onthe net present value of the costs of the Diesel tractor and Gasoline from (a), what are the equivalent annual costs for each machine?
EAC of Diesel=?
EAC of Gasoline=?
c.Based on the equivalent annual cost of the Diesel tractor and the Gasoline tractor from (b), which tractor should the company buy?
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Statistical Reasoning For Everyday Life
Authors: Jeff Bennett, William Briggs, Mario Triola
5th Edition
9780134494043
