Exercise $6-17$A $($Algo$)$ Asset replacement$-$opportunity cost LO $6-5$

Munoz Freight Company owns a truck that cost $$32,000.$ Currently, the truck's book value is $$22,000,$ and its expected

remaining useful life is five years. Munoz has the opportunity to purchase for $$26,000$ 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 $$13,000.$

Required

Calculate the total relevant costs. Should Munoz replace the old truck with the new fuel$-$efficient model, or should it

continue to use the old truck until it wears out?