cost of caputal 15%

rroe Capitai Budgeting 2O Pts) aur Grm is considering the purchase of a new truck. The Mercedes ost $90.0o0, have expenses (excluding depreciation) of s,ees truck clf s250,000 per year, an Your firm is consi AIO pts) ful life of three years. Your firm will depreciate the truck to ti hav straight-line depreciati e a use lion . The firm's tax rate is 40% and has a cost has of capital of colleague has al for an alternative tru value of the truck is expected to be $15,000. Your The salvage mputed an Equivalent Annual Cost (EAC), of $165,4 Toyota). Which truck should the firm buy? The Mercedes or the T Mercedes Cost 9o,ooo Expenses 250,000 pe Useful ifeytos roblem 3 Capital Budgeting (20 Pts) A) (10 pts) Your firm m is considering the purchase of a new truck. The Mercedes truck depreci will cost $90,000, have enses (excluding depreciation) of $250,000 per year, and lite of three years. Your firm will depreciate the truck to zero using straight-line d Th epreciation. The firm's tax rate is 40% and has a cost of capital of 15%. e salvage value of the truck is expected to be $15,000. Your colleague has already computed an Equivalent Annual Cost (EAC), of $165,417 for an alternative truck (a loyota). Which truck should the firm buy? The Mercedes or the Toyota? Mercedes Cost 9o,000 Expenses 15o,000 per seful lie