Brent owns Beck Trucking. Seven years ago, he purchased a large-capacity dump truck for $115,000 to provide short-haul earth moving services. He sold it today for $45,000. Operating and maintenance costs averaged $9,500 per year. A complete overhaul at the end of year 4 cost an extra $3,200.
Calculate the annual cost of the truck at 7% per year. And if Brent estimates that Beck cleared at most $20,000 per year added revenue from using the truck, was the purchase economically advantageous?