Walt Wallace Construction Enterprises is investigating the purchase of a new dump truck. Interest is 9%. The

Question:

Walt Wallace Construction Enterprises is investigating the purchase of a new dump truck. Interest is 9%. The cash flows for two Likely models are as follows

                                                Annual

                            First         Operating          Annual             Salvage

 Model               Cost               Cost              income              Value               Life

A                     $50,000           $2000              $9,000           $10,000           10 yr

B                     $80,000           $1000            $12,000           $30,000           10 yr

(a) Using present worth analysis, which truck should the firm buy, and why?

(b) Before the construction company can close the deal, the dealer sells out of Model B and cannot get any more. What should the firm do now and why?

Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: