Question
A forwarding agent is considering which of two delivery trucks to purchase. The French model will...
A forwarding agent is considering which of two delivery trucks
to purchase. The French model will cost $80 000, will have expenses
(including depreciation) of $250 000 per year, and a useful life of
three years. The Japanese model will cost $100 000, will have
expenses (including depreciation) of $240 000, and useful life of
four years. Four-year straight-line depreciation is used for either
truck, the French truck can be sold after three years for $15 000,
the Japanese one after four years for $12 000. Assuming 21 % tax
rate, which model should be purchased?
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