Frank is considering purchasing a new pick-up truck for his construction business. He assumes that the truck
Question:
Frank is considering purchasing a new pick-up truck for his construction business. He assumes that the truck will last 8 years and has accumulated the following lists of costs. From this list, can you determine what his acquisition cost, his cost of owning, his cost of operating and his cost of disposition will be for this truck? What is his whole of life cost?
Purchase price of the truck .......................................................................................... $40,000
Gasoline usage per year ................................................................................................. 5,000
Insurance per year............................................................................................................3,000
Customization to hold construction equipment ............................................................10,000
Cost to haul to a salvage yard .......................................................................................... 100
Interest on loan to purchase truck .................................................................................. 1,000
Repairs over the lifetime of the vehicle ........................................................................... 5,000
Tax per year ......................................................................................................................... 500
Salvage value ........................................................................................................................ 500
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...
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Franks costs would be as follows Acquisition cost 40000 purch...View the full answer
