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Arizona Truck Company (ATC) is considering the replacement of an old truck. The old truck...

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Accounting

Arizona Truck Company (ATC) is considering the replacement of an old truck. The old truck can be sold for $7,800 now. If it is sold in one year, the resale price will be $5,500, but ATC will spend $2,500 just before selling the truck to make it attractive to a buyer. Assume a cost of capital of 12%. What is the total cost of keeping the old truck for one more year? Express the cash flow in terms of its future value one year from now. a. $5,121 b. $5,736 c. $4,800 d. $5,376 e. None of the above

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