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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Roadrunner Freight Company owns a truck that cost $42,000. Currently, the truck's book value is $24,000, and its expected remaining
useful life is four years. Roadrunner has the opportunity to purchase for $31,200 a replacement truck that is extremely fuel efficient.
Fuel cost for the old truck is expected to be $6,000 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 $14,400.
Required
Calculate the total relevant costs. Should Roadrunner replace the old truck with the new fuel-efficient model, or should it continue to
use the old truck until it wears out?
Replace with
New
Keep Old
Total relevant costs
Should Roadrunner replace or continue the old truck?
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Check my wrl
Roadrunner Freight Company owns a truck that cost $42,000. Currently, the truck's book value is $24,000, and its expected remaining
useful life is four years. Roadrunner has the opportunity to purchase for $31,200 a replacement truck that is extremely fuel efficient.
Fuel cost for the old truck is expected to be $6,000 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 $14,400.
Required
Calculate the total relevant costs. Should Roadrunner replace the old truck with the new fuel-efficient model, or should it continue to
use the old truck until it wears out?
Replace with
New
Keep Old
Total relevant costs
Should Roadrunner replace or continue the old truck?
Prev
7 of 7
Next
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