What is the total cost of keeping the old ambulance

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Reference no: EM132831166

Problem 1: Mercy Ambulance Services (MAS) is considering the replacement of an old ambulance. The old ambulance can be sold for $7,800 now. If it is sold in one year, the resale price will be $5,500, but MAS will spend $2,500 just before selling the truck to make it attractive to a buyer. Assume a cost of capital of 12%. What is the total cost of keeping the old ambulance for one more year? Express the cash flow in terms of its future value one year from now. (Show all calculations for full credit.)

Reference no: EM132831166

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