Finch Freight Company owns a truck that cost $36,000. Currently, the truck's book value is $29,000, and its expected remaining useful life is five years. Finch has the opportunity to purchase for $23,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,600 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $12,000. Required Calculate the total relevant costs. Should Finch replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out? Answer is complete but not entirely correct. Replace With New Total relevant costs Should Finch replace or continue the old truck? Keep Old $ 30,000 $ Replace the old truck. 23,000✔

Finch Freight Company owns a truck that cost $36,000. Currently, the truck's book value is $29,000, and its expected remaining useful life is five years. Finch has the opportunity to purchase for $23,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,600 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $12,000. Required Calculate the total relevant costs. Should Finch replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out? Answer is complete but not entirely correct. Replace With New Total relevant costs Should Finch replace or continue the old truck? Keep Old $ 30,000 $ Replace the old truck. 23,000✔

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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