The U.S. Army must replace its fleet of cargo trucks. Three designs are under consideration. All designs provide the same level of service. We describe below the cost of a single truck with 2.5 tons of capacity. Which rate of 10% for economic decision.
Design A: Using modern materials, a truck can be constructed that lasts forever. The initial cost of the truck is $150,000. The annual operating and maintenance cost is $6,000.
Design B: Using current technology and a design and similar to the old trucks, the Army can buy a new truck for an initial cost of $50,000. The truck lasts for 10 years and has an annual operating costs is $10,000. It has no salvage value after 10 years.
Design C: Using new technology and a new design, the truck has an initial cost of $70,000. The truck lasts for 12 years with an annual operating cost of $6,000. It must be rebuilt at a cost of $20,000 after six years. It has no salvage value at the end of its life.
The U.S. Army must replace its fleet of cargo trucks. Three designs are under consideration. All designs provide the same level of service. We describe below the cost of a single truck with 2.5 tons of capacity. Which rate of 10% for economic decision.
Design A: Using modern materials, a truck can be constructed that lasts forever. The initial cost of the truck is $150,000. The annual operating and maintenance cost is $6,000.
Design B: Using current technology and a design and similar to the old trucks, the Army can buy a new truck for an initial cost of $50,000. The truck lasts for 10 years and has an annual operating costs is $10,000. It has no salvage value after 10 years.
Design C: Using new technology and a new design, the truck has an initial cost of $70,000. The truck lasts for 12 years with an annual operating cost of $6,000. It must be rebuilt at a cost of $20,000 after six years. It has no salvage value at the end of its life.
