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The Speedy - Delivery Company has two options for its delivery truck. The first option is to purchase a new truck for $18,000. The new
The Speedy - Delivery Company has two options for its delivery truck. The first option is to purchase a new truck for $18,000. The new truck will have a useful life of 5 years and a residual value of $2,000. Operating costs for the new truck will be $400. The second option is to overhaul its existing truck. The cost of the overhaul will be $8,000. The overhauled truck will have a useful life of 5 years and a residual value of $0. Operating costs for the overhauled truck will be $600. Using Speedy's discount rate of 5%, which option is better and by what amount? (Click the icon to view the present value of $1 table.) (Click the icon to view the present value of annuity of $1 table.) A. Better to overhaul by $7,566 O B. Better to purchase new by $25,134 C. Better to purchase new by $7,566 O D. Better to overhaul by $25,134
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