Should the cabs be replaced if the interest rate is given

Reference no: EM132169163

Question: Sacramento Cab Company owns several taxis that were purchased for $25,000 each 4 years ago. The cabs' current market value is $12,000 each, and if they are kept for another 6 years they can be sold for $2000 per cab. The annual maintenance cost per cab is $1000 per year. Sacramento Cab has been approached about a leasing plan that would replace the cabs. The leasing plan calls for payments of $6000 per year. The annual maintenance cost for each leased cab is $750 per year. Should the cabs be replaced if the interest rate is 10%?

Reference no: EM132169163

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