Find the incremental rate of returns

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Reference no: EM131108530

Your company is looking to buy a new truck. Analyze the three alternatives based on the information below. The trucks will average 25,000 miles per year and will be sold at the end of four years the salvage value listed. It is assumed that the maintenance and operation costs will increase each year by the amount listed in the table. Find the incremental rate of returns. Given a minimum attractive rate of return of 18%, which truck should your company buy. Type of Cost Initial M&O Annual increase Salvage Truck new Cost in M&O costs value A $35,000 $1.70/mi $0.15/mi/yr $15,000 B $55,000 $1.45/mi $0.17/mi/yr $20,000 C $60,000 $1.50/mi $0.07/mi/yr $28,000

Reference no: EM131108530

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