The town of Millbridge has to make a decision on replacing its garbage truck. It has narrowed the choice down to two different models. Model A will initially cost $ 80,000 and then will cost $ 4,100 per year to operate for its 20- year life. Model B will initially cost $ 100,000 and then will cost $ 3,600 per year to operate for its 30- year life. Use the annualized cost approach to determine which is a better choice. Assume a discount rate of 6 percent per year.
A. Solve using a spreadsheet program such as Excel.
B. Solve using a financial calculator (optional).

  • CreatedDecember 19, 2014
  • Files Included
Post your question