Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Question
Chapter 13, Problem 7P
a.
To determine
The better alternative by comparing before tax equivalent annual cost by using the preceding information.
b.
To determine
The better alternative by comparing before tax equivalent annual cost by using the information on annual cost of operations without a truck.
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Mr. Russ T. Steele sells his old vehicle for $5000 (you get more if you private salel) and pays cash for a used (but newer vehicle) that
costs $10,000. He also understands that he needs to allow for maintenance and operation costs of his vehicle. He estimates that these
costs will be approximately $2000 a year and estimates that the costs will increase by $100 per year. He hopes to keep the vehicle for
five years and then sell it for an estimated value of $2000. Mr. Steele has an MARR of 8%. The present value of the cash flow
associated with his purchase is most nearly:
Oa. -$7,400
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C $12,000
Od.-$15,100
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Engineering Economy (17th Edition)
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