sufficient funds re aali APPENDIX 2A.2 : MUTUALLY EXCLUSIVE PROJECTS WITH DIFFERENT ECONOMIC LIVES ESuppose a company is considering replacing One way to choose between these:m clusive investments is to compare t Dole or a new Daihatsu. Both trucks have the bresent values of their costs. Assuming a dis same capacity, but the Dole truck is sturdier countrat 1890, the PVs for each truck are than the Daiha expectancy is five years as opposed to fou years for the Daihatsu. In addition,the Dole's, annual operating costs of 3,000 are $1,000/ | a result, the Dole's life as follows: Dole $12,000 $3,000 $3,000 $3,000 $3,000 $3,000 Daihatsu $7,500 $4,000 $4,000 $4,000 $4,000 Year less than the Daihatsu's annual operating 0 costs of $4,000. However, the Daihatsu costs only $7,300, whereas the Dole costs $12,000. These data are summarized as follows Daihatsu truck $7,500 4 years Dole truck Initial cost Salvage value Life Operating cost $12,000 Present value $23,978.10 $20,740.40 5 years $3,000/year $4,000/year| | of cost at 8%