A local county government is considering purchasing some dump trucks for thetrash pickups. Each truck will cost $55,000 and have an operating and maintenance cost that starts at $18,000 the first year and increases by $3,000 per yearthereafter. Assume the salvage value is $12,000 at the end of 5 years and theinterest rate is 10%. The equivalent annual cost of owning and operating eachtruck is most nearly(a) $35,974 (b) $32,600(c) $6,956 (d) $37,939
A local county government is considering purchasing some dump trucks for thetrash pickups. Each truck will cost $55,000 and have an operating and maintenance cost that starts at $18,000 the first year and increases by $3,000 per yearthereafter. Assume the salvage value is $12,000 at the end of 5 years and theinterest rate is 10%. The equivalent annual cost of owning and operating eachtruck is most nearly(a) $35,974 (b) $32,600(c) $6,956 (d) $37,939
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A local county government is considering purchasing some dump trucks for the
trash pickups. Each truck will cost $55,000 and have an operating and maintenance cost that starts at $18,000 the first year and increases by $3,000 per year
thereafter. Assume the salvage value is $12,000 at the end of 5 years and the
interest rate is 10%. The equivalent annual cost of owning and operating each
truck is most nearly
(a) $35,974 (b) $32,600
(c) $6,956 (d) $37,939
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