Question

Eight years ago, Ohio Valley Trucking purchased a large-capacity dump truck for $108,000 to provide short-haul earth- moving services. The company sold it today for $45,000. Operating and maintenance costs averaged $10,500 per year. A complete overhaul at the end of year 3 costs an extra $3600. Calculate the annual cost of the truck at /8% per year The annual cost of the truck is $- per year.

Answer 1

THE ANNUAL COST OF THE TRUCK IS $ - 18360 PER YEAR

Purchase of 0 Quen Sol Calculation of P. V of outflow Years Particular outflowes Pu@8% Present Value 0 o 108000 I 10800 Truck 3 ra Yea Extra 3600 0.794 2857.80 cost I to fit tel 012. cost losoo 5.7466 60339.3 131197.) Calculation Prof outflowe Iuflow years Particule 4. Inflows. Du@8% Present Values & in year Sale of 45000 0.540 24312.1 TruclL NPU of Cash outflow = Total Pu of owflow - Total , duflow 171197.1 - 24342:1 Prof 146885 Annual Cost Pee Year = 146885 8 = $18360 Are