Sloan Trucking, Inc., headquartered on Mammoth Road in Lowell, Massachusetts, needs to replace its small fleet of
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Sloan Trucking, Inc., headquartered on Mammoth Road in Lowell, Massachusetts, needs to replace its small fleet of new delivery vans. The management at Sloan has narrowed the options down to just two. The first option has an initial cost of $180,000 and an annual maintenance cost of $18,000, while the second option has an initial cost of $220,000 and an annual maintenance cost of $10,000.
(a) Using what you’ve learned about break-even analysis, how many years will it take before the second option becomes the most economical?
(b) If the expected life of the fleet vehicles is 6 years, which alternative should be chosen?
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Related Book For 
Quantitative Analysis For Management
ISBN: 9780137943609
14th Edition
Authors: Barry Render, Ralph M. Stair, Michael E. Hanna, Trevor S. Hale
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