Exercise 13-17A (Algo) Asset replacement decisionsopportunity cost LO 13-5

Finch Freight Company owns a truck that cost $44,000. Currently, the trucks book value is $21,000, and its expected remaining useful life is five years. Finch has the opportunity to purchase for $30,200 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,400 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $18,000. Required Calculate the total relevant costs. Should Finch replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out?