The urban transport company utc in the city of megopolis, Ask an Expert

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The Urban Transport Company (UTC) in the city of Megopolis has been approached by a firm that has stated that by replacing the engines in their current fleet of mid capacity city buses with the engine built by the firm UTC will save over the 6 period life of the engine twice the period capital recovery amount each period in labor for repairs and maintenance that would be incurred if UTC continued using the buses with the old engines. UTC uses an interest rate of 6.0 percent. What savings in labor per bus could UTC expect if the promise is true and the engine cost is 64,000 per bus and the firm agrees it will purchase back their engines at the end of 6 periods of use for 4,000 each?

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Accounting Basics, Accounting

Category:- Accounting Basics
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