Anderson County has 35 older-model school buses that will be salvaged for $5,000 each. These buses cost $144,000 per year for fuel and maintenance. Now the county will purchase 35 new school buses for $40,000 each. They will travel an average of 2,000 miles per day for a total of 360,000 miles per year. These new buses will save $10,000 per year in fuel (compared with the older buses) for the entire group of 35 buses. If the new buses will be driven for 15 years and the county’s MARR is 6% per year, what is the equivalent uniform annual cost of the new buses if they have negligible market value after 15 years?

Anderson County has 35 older-model school buses that will be salvaged for $5,000 each. These buses cost $144,000 per year for fuel and maintenance. Now the county will purchase 35 new school buses for $40,000 each. They will travel an average of 2,000 miles per day for a total of 360,000 miles per year. These new buses will save $10,000 per year in fuel (compared with the older buses) for the entire group of 35 buses. If the new buses will be driven for 15 years and the county’s MARR is 6% per year, what is the equivalent uniform annual cost of the new buses if they have negligible market value after 15 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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