Problem: Module $6$ Textbook Problem $9$

Learning Objective: $6-5$ Make appropriate asset replacement decisions

Stuart Freight Company owns a truck that cost $$47,000.$ Currently, the truck's book value is $$21,000,$ and its expected remaining useful

life is five years. Stuart has the opportunity to purchase for $$31,300$ a replacement truck that is extremely fuel efficient. Fuel cost for the

old truck is expected to be $$6,400$ per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in

good condition, can be sold for only $$19,000.$

Required

Calculate the total relevant costs. Should Stuart replace the old truck with the new fuel$-$efficient model, or should it continue to use the

old truck until it wears out?