Operating and maintenance costs are estimated

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Reference no: EM13818355

An independent trucker purchases a fancy new over-the-road rig for $220,000. The expected lifetime is 12 years, and the salvage value estimated at that time is $85,000. Operating and Maintenance costs are estimated at $75,000 per year, and his annual interest rate is 12%. Assume he averages 1800 miles per week and 40 weeks a year, and that his revenue is $1.40 per mile. Find:

(1) The equivalent present worth (PW) of the investment

(2) The annual equivalent worth (AW) of the investment,

(3) The equivalent future worth (FW) of the investment at the end of the study period

(4) What is his (profit/loss) per mile?

(5) Is this a good investment? If not, what could he do to make it a good one?

Reference no: EM13818355

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