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nd functionalit ery truck cam when should allenger and

nd functionalit ery truck cam when should allenger and

FINANCIAL ACCOUNTING
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 delivery truck was purchased two years ago for $50,000. Today, the delivery truck can be sold for $25,000, and then be replaced with a newer model with better specification and functionality for $42,500 with a useful life of not more than two years; or the old delivery truck can be kept in service for a maximum of 1 more year. If the MARR is 15%, when should the old delivery truck be replaced? Refer to the following table for the challenger and defender. Challenger Defender Market O&M Year Value Costs 0 1 $10,000 2 12,500 $42,500 31,000 25,000 Market O&M Value Costs $25,000 17,000 $14,000
Transcribed Image Text:A delivery truck was purchased two years ago for $50,000. Today, the delivery truck can be sold for $25,000, and then be replaced with a newer model with better specification and functionality for $42,500 with a useful life of not more than two years; or the old delivery truck can be kept in service for a maximum of 1 more year. If the MARR is 15%, when should the old delivery truck be replaced? Refer to the following table for the challenger and defender. Challenger Defender Market O&M Year Value Costs 0 1 $10,000 2 12,500 $42,500 31,000 25,000 Market O&M Value Costs $25,000 17,000 $14,000
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