e new truck costs $85,000 and is expected to er ton-mile. It has a life of 15 years with no s esently owned truck can be sold now for $32 er ton-mile for O & M, and have an expected value Ho

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A contractor is thinking of selling his present dump truck and buying a new
one. The new truck costs $85,000 and is expected to incur O & M costs of
$0.25 per ton-mile. It has a life of 15 years with no significant salvage value.
The presently owned truck can be sold now for $32,000. If kept, it will cost
$0.33 per ton-mile for O&M, and have an expected life of five years, and no
salvage value. Use i= 10 percent. Find the break-even point in terms of ton-
miles per year.
Transcribed Image Text:A contractor is thinking of selling his present dump truck and buying a new one. The new truck costs $85,000 and is expected to incur O & M costs of $0.25 per ton-mile. It has a life of 15 years with no significant salvage value. The presently owned truck can be sold now for $32,000. If kept, it will cost $0.33 per ton-mile for O&M, and have an expected life of five years, and no salvage value. Use i= 10 percent. Find the break-even point in terms of ton- miles per year.
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