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Problem: Module 6 Textbook Problem 9 Learning Objective: 6-5 Make appropriate asset replacement decisions Munoz Freight Company owns a truck that cost $45,000. Currently, the
Problem: Module 6 Textbook Problem 9 Learning Objective: 6-5 Make appropriate asset replacement decisions Munoz Freight Company owns a truck that cost $45,000. Currently, the truck's book value is $23,000, and its expected remaining useful life is five years. Munoz has the opportunity to purchase for $29,100 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,500 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
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