Question
Your firm's discount rate is 2 percent. You are considering the purchase of truck A or Truck B. Truck A costs $100, has a useful
Your firm's discount rate is 2 percent. You are considering the purchase of truck A or Truck B. Truck A costs $100, has a useful life of 3 years, no salvage value and maintenance costs of $10 per year. Truck B costs $80, has a useful life of 2 years, no salvage value and maintenance costs of $15 per year. Which truck should you select and why? (Excel needed)
A. Truck A because the EUAC of -57.5 is less than Truck B's EUAC of -67.4
B. Truck A because the NPV of 125 if larger than B's NPV of 106
C.Truck B because the EUAC of 61.1 is greater than Truck A's EUAC of 50.2
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