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Question 11 15 pts The WWM Corporation is a trucking company that moves household goods long distance. It is thinking of replacing part of its
Question 11 15 pts The WWM Corporation is a trucking company that moves household goods long distance. It is thinking of replacing part of its current fleet of trucks. These are currently all Fords. The firm has narrowed the choice to two models. Both are capable of carrying the same amount of goods. The first one is made by Volvo. The model costs $150,000 initially. It is expected to have a life of 5 years and is depreciated on a straight line basis to a book value of $15,000. At the end of 5 years you will sell the truck at its book value and repeat the same process. The maintenance costs are expected to be $22,000 before tax each year. The second model is one made by Mercedes. This costs $175,000 but lasts 8 years. It will be depreciated on a straight line basis to a book value of $35,000. At the end of 8 years you will sell the truck at its book value and repeat the same process. The maintenance costs are expected to be $25,000 before tax each year. The firm has a tax rate of 34%. It is anticipated that the firm will be profitable for the foreseeable future. The firm has a discount rate for this type of project of 12%. Assume all cash flows occur at the end of each year except where otherwise stated. Please input your answer without the $ sign and the comma. Round it to the nearest dollar. The Equivalent Annual Cost of Volvo is The Equivalent Annual Cost of Mercedes Benz is
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