A truck,costing $25,000 and uninsured,was wrecked the very first day it was used.It can either be disposed of for $5,000 cash and be replaced with a similar truck costing $27,000,or rebuilt for $20,000 and be brand new as far as operating characteristics and looks are concerned.The best choice provides a net savings of:

Question

Quizplus · Accepted Answer

The cost of disposing of the wrecked truck and replacing it with a new one is $27,000 - $5,000 = $22,000. Rebuilding the truck would cost $20,000. Therefore, choosing to rebuild the truck instead of replacing it provides a net savings of $22,000 - $20,000 = $2,000. Therefore, option A is the best choice.

A Truck,costing $25,000 and Uninsured,was Wrecked the Very First Day