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Consider the following two tractors a company can purchase. The following tables provide the costs the company will incur ( in thousands of dollars )
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.
Initial Cost Operating Costs per Year Expected Life
Diesel $ $
Gasoline $ $
The transportation firm can only afford one of the tractors. The two tractors have identical production capabilities. The firm's cost of capital is
Find the present value of the costs of using the two tractors.
Diesel
Gasoline
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