**Finch Freight Company Truck Replacement Analysis**Finch Freight Company owns a truck that originally cost $41,000. Currently, this truck’s book value is $24,000, with an expected remaining useful life of four years. Finch has an opportunity to purchase a new, extremely fuel-efficient replacement truck for $30,500. The fuel cost savings with the new truck are anticipated to be $6,100 less per year than the old truck. Despite being in good condition, the current truck can only be sold for $18,000.**Required:**Calculate the total relevant costs to determine if Finch should replace the old truck with the new fuel-efficient model or continue using the old truck until it wears out.**Analysis Table:**| | Keep Old Truck | Replace With New Truck ||---------------------|----------------|------------------------|| Total Relevant Costs| | |**Decision Options:**- Choose to **Replace the old truck**.- Choose to **Continue to use the old truck**.The table is designed to help calculate and compare the costs associated with keeping the old truck versus replacing it. The decision will be based on the total relevant costs associated with each option.

Total relevant cost = Realizable value of old truck + Additional fuel cost for four years = $18000 +…

Answered: Finch Freight Company owns a truck that…

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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