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The CFO of a consulting engineering firm is deciding between purchasing Ford Explorers and Toyota 4 Runners for company principals. The purchase price for the
The CFO of a consulting engineering firm is deciding between purchasing Ford Explorers and Toyota Runners for company principals. The purchase price for the Ford Explorer will be $ Annual maintenance costs for the Explorer are expected to be $ per year more than that of the Runner. The purchase price for Toyota Runners is The tradein values after years are estimated to be of the first cost for the Explorer and for the Runner. a What is the incremental ROR between the two vehicles? b Provided the firm's MARR is per year, which vehicle should it buy?
a The incremental ROR between the two vehicles is
b The firm should buy as the incremental ROR is the MARR.
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