Rundle Freight Company owns a truck that cost $33,000. Currently, the trucks book value is $27,000, and its expected remaining useful life is five years. Rundle has the opportunity to purchase for $28,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $7,000 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 $16,000.

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?

Total Relevant Costs: Keep Old: ? Replace with new: ?

Should Rundle replace or continue with the old truck?