P is using an 11% annual interest rate to decide if they should buy Truck A or Truck B. Which truck is more economical to buy, assuming that the two trucks serve similar functions and purposes? Use (a) Annual Cost Method (b) Present Worth Method, (c) Rate of Return on Additional Investment method.
P is using an 11% annual interest rate to decide if they should buy Truck A or Truck B. Which truck is more economical to buy, assuming that the two trucks serve similar functions and purposes? Use (a) Annual Cost Method (b) Present Worth Method, (c) Rate of Return on Additional Investment method.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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P is using an 11% annual interest rate to decide if they should buy Truck A or Truck B.
Which truck is more economical to buy, assuming that the two trucks serve similar
functions and purposes? Use (a) Annual Cost Method (b) Present Worth Method, (c)
of Return
Formulas to be used:
Rate of return on additional investment =(Savings of Benefits / Additional Capital) x 100%
ROR≥ MARR (Choose the alternative with larger capital)
ROR ≤ MARR (Choose the alternative with lesser capital investment)
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