Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries....
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Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Present Truck New Truck Purchase cost new $ 37,000 $ 47,000 Remaining book value $ 27,000 - Overhaul needed now $ 26,000 - Annual cash operating costs $ 19,500 $ 18,000 Salvage value-now $ 10,000 - Salvage value-five years from now $ 13,000 $ 13,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be
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