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Moyle Construction, Co. may buy a new dump truck with a 10-year life. The dump truck...

Moyle Construction, Co. may buy a new dump truck with a 10-year life. The dump truck will cost $65,000 (today). The company anticipates an annual benefit of $8,000 per year at the end of each year from the use of the dump truck. Additionally, the company will sell the used dump truck for $25,000 at the end of the 10th year. The company has a minimum acceptable rate of return of 6% per year, compounded annually. what is the annual worth of the dump truck?

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Answer #1

AW of the truck = -65000 * (A/P, 6%,10) + 8000 + 25000 * (A/F, 6%,10)

= -65000 * 0.135868 + 8000 + 25000 * 0.075868

= 1065.28

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