Reference no: EM132972054

Problem 1: Suppose, in the UPS hybrid truck problem above, the EVI truck could be operated an additional year (5 years instead of 4 years) if, at the end of year 4, the truck is overhauled for a price of $10,000. Similarly, suppose the EDI truck could be operated an additional year (6 years instead of 5 years) if, at the end of year 5, the truck is overhauled for $15,000. Both trucks, now one year older, would have salvage prices of $0. Which truck at which replacement cycle is optimal now? Assume the EAC for EDI is 27,093 for a 5-year cycle and 26,738 for a 6-year cycle. To reduce the number of steps in solving this problem, consider the following partially completed analysis for the EVI truck for the 5-year cycle.