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11. You are evaluating two pieces of equipment for the company, a truck and an...

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11. You are evaluating two pieces of equipment for the company, a truck and an overhead pulley system. A truck has a low initial cost but high annual operating costs, and an overhead pulley system costs more but has lower operating costs. The cost of capital is 10%, and the equipment's expected net costs are as follows: Year Truck Pulley 0 1 2 3 -110,000 -82,000 -82,000 -82,000 -240,000 -49,000 -50,000 -50,000 4 5 -82,000 -82,000 -50,000 -50,000 (a) What is the present value of costs of each piece of equipment? Which equipment should be chosen? If the cost of capital is 7%, which equipment should be chosen? (b)

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