Use the Following Information to Answer the Questions Below

Our Business is making a Decision Today for the Next 5 years, to Either Keep our OLD Truck or to Purchase a NEW Truck.

Our Business has the Following Information to Consider in making the Decision;

OLD TRUCK Costs and Benefits

The Cost of the Old Truck was $100,000 and will last for another 5 Years

Maintenance on the Old Truck is $11,000 per year

Gas to Run the Old Truck is $12,000 per Year

The Old Driver is paid $35,000 per Year

The Old Truck Could be sold today for $35,000

The Old Truck can be sold in 5 years for $10,000

The Old Truck Insurance Costs are $6,000 per Year

NEW TRUCK Costs and Benefits

The Cost of the New Truck would be $200,000 and will last for 5 years.

The new Truck can be sold in 5 years for $55,000

The Maintenance of the New Truck would be Zero for the First 3 years and then $7,000 per year after

The Gas Cost of the New Truck is $9,000 per year

The New Driver is paid $30,000 per year

New Truck Insurance Costs are $5,000 per Year

I NEED THE STEPS ON HOW TO GET THESE ANSWERS FOR FUTURE STUDYING FOR MY TESTS

1. Compute the Total NET Relevant (Cost) or Benefit to Keep the Old Truck

(310,000)

2. Compute the Total NET Relevant (Cost) or Benefit to Buy the New Truck

(344,000)

3. Compute the Dollar Benefit to your Decision

34000

We should keep the old truck

A qualitative benefit of a new truck is safety