Question
Problem: Module 6 Textbook Problem 9 Learning Objective: 6-5 Make appropriate asset replacement decisions Rundle Freight Company owns a truck that cost $46,000. Currently, the
Problem: Module 6 Textbook Problem 9
Learning Objective: 6-5 Make appropriate asset replacement decisions
Rundle Freight Company owns a truck that cost $46,000. Currently, the trucks book value is $22,000, and its expected remaining useful life is four years. Rundle has the opportunity to purchase for $31,400 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,100 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 Rundle 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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