An independent over-the-road (OTR) truck driverowner paid $68,000 for a used tractor-trailer. The salvage value of the

Question:

An independent over-the-road (OTR) truck driverowner paid $68,000 for a used tractor-trailer. The salvage value of the rig after 5 more years of use is expected to be $36,000. The operating cost is $0.50 per mile and the base mileage rate (i.e., revenue) is $0.61 per mile.

(a) How many miles per year must the owner drive just to break even at an interest rate of 10% per year?

(b) If the owner drives 600 miles per day, how many days per year will be required for break even?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...

Fantastic news! We've Found the answer you've been seeking!