Problem
Zachary Freight Company owns a truck that cost $45,000. Currently, the truck's book value is $23,000, and its expected remaining useful life is four years. Zachary has the opportunity to purchase for $29,200 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,400 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $17,000.
Task
Calculate the total relevant costs. Should Zachary replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out?