A cty is going to buy a new fire truck Due to expanded growt

A cty is going to buy a new fire truck Due to expanded growth in a certain portion af the city, new fre fighting capacity is needod A 12 year breck can be purchaned. Compare the present worth of the asset with an interest rate of 8% per year and decde it \"s a good alternative Present value$72,000 Anrual cost 5.500 Salvage value $7 200 Lite is years 12 years a PW- 72,524 b PW-106000 c, pw-. 110,500

Solution

Option C is correct.

Present Worth = $72000 + $5500*PVAF(8%,12) - $ 7200 * PVF (8%,12)

= $110590