A recent graduate who wants to start an excavation/earth-moving business is trying to determine which size of used dump truck to buy. He knows that as the bed size increases, the net income increases, but he is uncertain whether the incremental expenditure required for the larger trucks is justified. The cash flows associated with each size truck are estimated below. The contractor has established a MARR of 18% per year, and all trucks are expected to have a remaining economic life of 5 years. (a) Determine which size truck he should purchase. (b) If two trucks are to be purchased, what should be the size of the second truck?
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