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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 $3,000. Operating costs for the new truck will be $200. The second option is to overhaul its existing truck. The cost of the overhaul will be $5,000. 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 $500. 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.) O A. Better to overhaul by $21,701 O B. Better to overhaul by $9,349 O C. Better to purchase new by $21,701 OD. Better to purchase new by $9,349 i Data Table Present Value of S1 Periods 4 5 0 6 0 4% 0.855 .822 .790 5% 0.823 0.784 0.746 6% 0.792 0.747 0.705 Print Done Print Done Data Table Present Value of Annuity of $1 Periods 4% 4 3 .630 5 4 .452 6 5 .2425 5% 3.546 4.329 .076 6% 3.465 4.212 4.917 Print Done
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