Please answer by working out with equations and not excel 52

5-24 Walt Wallace Construction Enterprises new dump truck with a 10-year life. Int The cash flows for two likely models are may buy a erest is 5% as follows Annual First Operating Annual Salvage Cost Income Value Model Cost A $50,000 $12,000 $19,000 $10,000 B 80,000 ,000 22,000 30,000

Solution

Solution:

Truck A:

PW =-$ 50000 - $ 12000 ( P/A,5,10 ) + $ 19000 ( P/A ,5,10) + $ 10000 ( P/F,5,10)

-50,000 - 12000*7.721 + 19,000 * 7.721 + 10,000 * 0.614 = $10,191

Truck B:

PW=$ 80,000 $11,000 (P/5,10) + $ 22,000 ( P / 5 , 5 ) + $ 30,000 ( P/F,5,10)

PW=$ 80,000 $11,000*7.721 + $ 22,000*7.721 + $ 30,000*0.614 = $183,351

Buy Truck B

Part-2)

The firm need to wait until the dealership has the truck that it is looking for or search a suitable alternative