Walt Wallace Construction is investigating the purchase of a new dump truck with a 10 year useful life. Annual interest is 9%.The cash flows for two models are: Model Purchase price Annual Operating Cost Annual Income Salvage Value A $50,000 $2,000 $9,000 $10,000 B $80,000 $1,000 $12,000 $30,000 Using the EUAB analysis, which truck should be purchased and why? (Show your EUAB numbers for each option and explain the better choice.)

Walt Wallace Construction is investigating the purchase of a new dump truck with a 10 year useful life. Annual interest is 9%.The cash flows for two models are: Model Purchase price Annual Operating Cost Annual Income Salvage Value A $50,000 $2,000 $9,000 $10,000 B $80,000 $1,000 $12,000 $30,000 Using the EUAB analysis, which truck should be purchased and why? (Show your EUAB numbers for each option and explain the better choice.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Walt Wallace Construction is investigating the purchase of a new dump truck with a 10 year useful life. Annual interest is 9%.The cash flows for two models are:

Model

Purchase price

Annual

Operating Cost

Annual Income

Salvage Value

$50,000

$2,000

$9,000

$10,000

$80,000

$1,000

$12,000

$30,000

Using the EUAB analysis, which truck should be purchased and why? (Show your EUAB numbers for each option and explain the better choice.)

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