(c) $5,900 $6,900 (e) None of the above: Your county has asked you to analyze th

Question

(c) $5,900 $6,900 (e) None of the above: Your county has asked you to analyze the purchase of some dump trucks. Each truck will cost $45,000 and have an operating and maintenance cost that starts at $16,400 the first year and increases by $2,000 per year. Assume the salvage value at the end of 5 years is $9,000 and the interest rate is 12%. The equivalent annual cost of each truck is most nearly (a) $31,000 (b) $41,200 (c) $26,100 (d) $29,600 (e) None of the above: How annually in ord monanabaeposited now

Explanation / Answer

Solution: $31,000

Working:

CR(12%) = ($45,000 - $9,000) (A/P, 12%,5) + (0.12*9,000) = 11,067

AE(12%) O&M = 16,400 + $2000 (A/G, 12%,5) = 16,400 + 2,000 * 1.7746 = 19,949

AE(12%) = $11,067 + $19,949 = $31,016

Selecting nearest option

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