Question
Your firm's 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
Your firm's 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 -53.8 is less than Truck B's EAC of -64.2
Truck B because the EAC of 73.8 is greater than Truck A's EAC of 65.1.
Truck A because the EAC of -65.1 is less than Truck B's EAC of -73.8.
Truck A because the NPV of 118 if larger than B's NPV of 100.
If done in excel please show formulas..
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started