question archive Arizona Truck Company (ATC) is considering the replacement of an old truck
Arizona Truck Company (ATC) is considering the replacement of an old truck
Subject:FinancePrice: Bought3
Arizona Truck Company (ATC) is considering the replacement of an old truck. The old truck can be sold for $19,500 now. If it is sold in one year, the resale price will be $13,750, but ATC will spend $6250 just before selling the truck to make it attractive to a buyer. Assume a cost of capital of 12%. What is the total cost of keeping the old truck for one more year? Express the cash flow in terms of its future value one year from now.
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a. |
$12,803 |
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b. |
$14,340 |
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c. |
$12,000 |
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d. |
$16,128 |
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