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The Mega Bucks Trucking Company needs to replace a truck that was involved in an accident. The company is facing three different options: Year Truck

The Mega Bucks Trucking Company needs to replace a truck that was involved in an accident. The company is facing three different options:

Year

Truck A

Truck B

Truck C

0

-$30,000

-$42,000

-$40,000

1

-1,500

-1,000

-2,160

2

-1,500

-1,000

-1,560

3

-2,000

-600

-1,000

4

-4,000

-600

-1,000

5

-5,000

-600

6

-6,000

-500

7

-500

If the company is currently facing a cost of capital of 15%, which truck should it purchase (using either the replacement chain or annual annuity equivalent approach)?

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