Your firm is considering the acquisition of a new fleet of trucks to replace the existing fleet. The trucks are used to haul equipment to various sites, and your engineering department has identified two alternatives.

Option 1: Thanos-Series (4-ton capacity) step-side pickup

-The cost of each truck is $50000

-Each vehicle has a five-year life; after which it will have an estimated market value of $5000

-The annual maintenance on each vehicle is estimated at $1800 per year

-A fleet of 100 trucks will be needed

Option 2: Hulk-Taskmasters (3.5-ton capacity) light-weight flatbed

-The cost of each truck is $39000

-Each vehicle has a four-year life; after which it will have an estimated market value of $4000

-The annual maintenance on each vehicle is estimated at $1200 per year

-Because of its different capacity, a fleet of 115 trucks will be needed

Assume that both trucks will be fully depreciated over their respective useful lives using the straight-line depreciation, and a corporate tax rate of 21%. Your job is to determine the most economically efficient option, given that the trucks will be replaced at the end of their useful lives. Assume that the firm requires a 9% after-tax rate of return on investments. Compute the relevant analysis (i.e. AEC) and indicate the best alternative (rounded to nearest $1,000).

Group of answer choices

Option 1: Thanos-Series; Option 1: Thanos-Series AEC -896000, Option 2: Hulk-Taskmasters AEC -954000

Option 1: Thanos-Series; Option 1: Thanos-Series AEC -1152000, Option 2: Hulk-Taskmasters AEC -1178000

Option 2: Hulk-Taskmasters; Option 2: Hulk-Taskmasters AEC -1152000, Option 1: Thanos-Series AEC -1178000

none of them

Option 2: Hulk-Taskmasters; Option 2: Hulk-Taskmasters AEC -896000, Option 1: Thanos-Series AEC -954000

Answer rating: 100% (QA)

Fleet Replacement Analysis ThanosSeries vs HulkTaskmasters To determine the most economically effici... View the full answer