In a typical year, J. B. Hunt Transport Services Inc. (JBHT) purchases hundreds of new over-the-road tractors.
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In a typical year, J. B. Hunt Transport Services Inc. (JBHT) purchases hundreds of new over-the-road tractors. A certain type of tractor has a retail price of $100,000. End-of-year book values, salvage values, and annual operations and maintenance (O&M) costs over its useful life are provided in the following table.
| EOY | |Book Value| | Salvage Value| | O&M Costs| |
| 1 | $80,000 | $53,000 | $15,000 |
| 2 | $48,000 | $39,000 | $21,000 |
| 3 | $28,800 | $28,000 | $27,000 |
| 4 | $17,280 | $18,000 | $34,000 |
| 5 | $5,760 | $14,000 | $42,000 |
| 6 | 0 | $6,000 | $49,000 |
Determine the economic life of this type of tractor given that the MARR is 15% and the marginal tax rate is 40%.
Expert Answer:
Economic Life of the tractor will be the life at which its Equivalent Annual Cost is least below is the table of EAC of tractor at each year end Repla... View the full answer
Related Book For 
Probability & Statistics for Engineers & Scientists
ISBN: 978-0131877115
8th edition
Authors: Ronald E. Walpole, Raymond H. Myers, Sharon L. Myers, Keying Ye
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