Compare the annual equivalent costs of a truck kept

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Operating and maintenance expenses for a truck increase by $400/year for the first 5 years of operation. First-year O&M expenses are $2,400. The initial cost of a truck is $8400, estimated salvage value after 4 years is $2,400, and the salvage after 5 years is estimated to be $1,500. Using I = 10%, compare the annual equivalent costs of a truck kept for 4 years and one kept for 5 years, on a before tax basis.

Reference no: EM13771611

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