Question
Your firms discount rate is 30 percent. You are considering the purchase of Truck A or Truck B. Truck A costs $100, has a useful
Your firms discount rate is 30 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?
Group of answer choices:
Truck A because the EAC of 65.1 is less than Truck Bs EAC of -73.8.
Truck A because the EAC of -53.8 is less than Truck Bs EAC of -64.2
Truck A because the NPV of 118 if larger than Bs NPV of 100.
Truck B because the EAC of 73.8 is greater than Truck As EAC of 65.1.
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