An investor wants to invest in the trucking business. To run this business, 10 trucks should be acquired. The market price of a truck is $50 000. It is also necessary to pay $390 000 per year as wages to the truck drivers. Vehicle repair and maintenance costs are $10 000 per year. What is the annual worth of the project's costs at 5% MARR over a 10-year period?
A)$400 000
B)$406 475
C)$454 750
D)$464 750
E)$551 800

Question

Quizplus · Accepted Answer

The annual worth of the project's costs includes the capital cost of the trucks, wages, and maintenance. The capital cost is calculated using the capital recovery factor for 10 trucks at $50,000 each, with a 5% MARR over 10 years. The formula for the capital recovery factor is: A = P(A/P, i, n). Adding the annual wages and maintenance gives the total annual cost.

An Investor Wants to Invest in the Trucking Business