A city is going to buy a new fire truck Due to expanded grow

A city is going to buy a new fire truck. Due to expanded growth in a certain portion of the city, new fire fighting capacity is needed A 12 year truck can be purchased Compare the present worth of the asset with an interest rate of 8% per year and decide if it is a good alternative Present value $72,000 Annual cost-5,500 Salvage value $7.200 Life is years 12 years a PW 76,528 b. PW-106,000 c. PW-72,524 d. PW 110.590

Solution

Solution: -110,590

Working: -72,000 - 5500 (P/A, 8%, 12) + 7200 (P/F, 8%, 12)

= -72,000 - 5500 * 7.5361 + 7200 * 0.3971

= -110,590