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REPLACEMENT 2 3 A Old truck Book value Market value New truck REPLACEMENT PROBLEM 3,000, 12,ooq Cost 6 Life (years) 7 Pre-tax annual savings 8

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REPLACEMENT

2 3 A Old truck Book value Market value New truck REPLACEMENT PROBLEM 3,000, 12,ooq Cost 6 Life (years) 7 Pre-tax annual savings 8 Value, year 5 9 10 Tax rate Discount rate 11 12 Year 13 14 1 15 2 16 3 17 4 18 5 19 20 21 NPV 50,0001 15,000; 25,0001 Cash flow

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