Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 5

A local county is considering purchasing some dump trucks for the trash pickups. Each truck will cost $55,000 and have an operating and maintenance cost that stalls at $ 18,000 during the first year and increases by $3,000 per year thereafter. Assume the salvage value is $12,000 at the end of 5 years and the interest rate is 10%. To meet the equivalent annual cost of owning and operating each truck over 5-year planning horizon, what is the required annual trash collection fees