A firm is trying to decide between two types of trucks, one a conventional vehicle and the other a diesel-powered vehicle. The following information is available. a-With interest at 4% per year, determine the annual mileage at which the two trucks are equivalent. b-for 20000 miles per year in travel, which truck should be recommended?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A firm is trying to decide between two types of trucks, one a conventional vehicle and the other a diesel-powered vehicle. The following information is available.

a-With interest at 4% per year, determine the annual mileage at which the two trucks are equivalent.

b-for 20000 miles per year in travel, which truck should be recommended?

Gasoline Diesel
$32,000
5 years
$12,000
Operating cost per mile $0.48
Initial investment
$27,000
Useful life
4 years
$8,000
Salvage value
$0.36
Transcribed Image Text:Gasoline Diesel $32,000 5 years $12,000 Operating cost per mile $0.48 Initial investment $27,000 Useful life 4 years $8,000 Salvage value $0.36
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