A municipality is trying to decide on the purchase of a refuse collection vehicle. Two types are being considered, A and B, and the capital and operating costs are as shown. Each truck is expected to have a useful life of 10 yrs. t Truck A Truck B Initial(capital)cost $110,000 $85,000 Maintenance cost/yr. 3,000 6,000 Fuel and oil cost/yr 4,000 7,000 Which truck should the municipality purchase based on these costs alone? Calculate the cost both on an annual and present worth basis, assuming an interest rate of 8%. What is the Capital Recovery for Truck A? What is the Capital Recovery for Truck B? What is the Total Annual Cost for Truck B? What is the Total Annual Cost for Truck A?
A municipality is trying to decide on the purchase of a refuse collection vehicle. Two types are being considered, A and B, and the capital and operating costs are as shown. Each truck is expected to have a useful life of 10 yrs. t Truck A Truck B Initial(capital)cost $110,000 $85,000 Maintenance cost/yr. 3,000 6,000 Fuel and oil cost/yr 4,000 7,000 Which truck should the municipality purchase based on these costs alone? Calculate the cost both on an annual and present worth basis, assuming an interest rate of 8%. What is the Capital Recovery for Truck A? What is the Capital Recovery for Truck B? What is the Total Annual Cost for Truck B? What is the Total Annual Cost for Truck A?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A municipality is trying to decide on the purchase of a refuse collection vehicle. Two types are being considered, A and B, and the capital and operating costs are as shown. Each truck is expected to have a useful life of 10 yrs. t Truck A Truck B Initial(capital)cost $110,000 $85,000 Maintenance cost/yr. 3,000 6,000 Fuel and oil cost/yr 4,000 7,000 Which truck should the municipality purchase based on these costs alone? Calculate the cost both on an annual and present worth basis, assuming an interest rate of 8%.
What is the Capital Recovery for Truck A?
What is the Capital Recovery for Truck B?
What is the Total Annual Cost for Truck B?
What is the Total Annual Cost for Truck A?
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