A local county is considering purchasing somedump trucks for the trash pickups. Each truck will cost$55,000 and have an operating and maintenance costthat starts at $18,000 during the first year and increasesby $3,000 per year thereafter. Assume the salvagevalue is $12,000 at the end of 5 years and the interestrate is 10%. To meet the equivalent annual cost of owning and operating each truck over 5-year planning horizon, what is the required annual trash collection fees?
A local county is considering purchasing somedump trucks for the trash pickups. Each truck will cost$55,000 and have an operating and maintenance costthat starts at $18,000 during the first year and increasesby $3,000 per year thereafter. Assume the salvagevalue is $12,000 at the end of 5 years and the interestrate is 10%. To meet the equivalent annual cost of owning and operating each truck over 5-year planning horizon, what is the required annual trash collection fees?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A local county is considering purchasing some
dump trucks for the trash pickups. Each truck will cost
$55,000 and have an operating and maintenance cost
that starts at $18,000 during the first year and increases
by $3,000 per year thereafter. Assume the salvage
value is $12,000 at the end of 5 years and the interest
rate is 10%. To meet the equivalent annual cost of owning and operating each truck over 5-year planning horizon, what is the required annual trash collection fees?
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