5. Sacramento Cab Company owns several taxis that were purchased for $25,000 4 years ago. The...

 

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5. Sacramento Cab Company owns several taxis that were purchased for $25,000 4 years ago. The cabs' current market value is $12,000 each, and if they are kept for another 6 years, they can be sold for $2,000 per can. The annual maintenance cost per cab is $1,000 per year. Sacramento Cab has been approached about a leasing plan that would replace the cabs. The leasing plan calls for payments of $6,000 per year. The annual maintenance cost for leased cab is $750 per year. Should the cabs be replaced is the interest rate is 10%? 5. Sacramento Cab Company owns several taxis that were purchased for $25,000 4 years ago. The cabs' current market value is $12,000 each, and if they are kept for another 6 years, they can be sold for $2,000 per can. The annual maintenance cost per cab is $1,000 per year. Sacramento Cab has been approached about a leasing plan that would replace the cabs. The leasing plan calls for payments of $6,000 per year. The annual maintenance cost for leased cab is $750 per year. Should the cabs be replaced is the interest rate is 10%?

Answer rating: 100% (QA)

To determine whether the cabs should be replaced with the leasing plan at an interest rate of 10 we ... View the full answer