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Brea purchases a Tesla Truck for $120,000. The truck declines in value by 20%of...

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Accounting

Brea purchases a Tesla Truck for $120,000. The truck declines in value by 20%of the current value each year. The initial operating cost for Year 1 is $3,500, which increases by $400 each year. MARR is 5%.
a.) Determine the EAC (capital costs) if the truck is used for one year.
b.) Determine the EAC (capital costs) if the truck is used for five years.
c.) If you only have the option of using the equipment for one year OR for five years, which option do you choose? Why? Tip: Sketch the cash
flow diagram for part
(a) and part (b).

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