Anderson County has 35 older-model school buses that will be salvaged for $5,000 each. These buses cost $144,000 per year for fuel and maintenance. Now the county will purchase 35 new school buses for $40,000 each. They will travel an average of 2,000 miles per day for a total of 360,000 miles per

Question

Anderson County has 35 older-model school buses that will be salvaged for [latex]\$ 5,000[/latex] each. These buses cost [latex]\$ 144,000[/latex] per year for fuel and maintenance. Now the county will purchase 35 new school buses for [latex]\$ 40,000[/latex] each. They will travel an average of 2,000 miles per day for a total of 360,000 miles per year. These new buses will save [latex]\$ 10,000[/latex] per year in fuel (compared with the older buses) for the entire group of 35 buses. If the new buses will be driven for 15 years and the county's MARR is [latex]6 \%[/latex] per year, what is the equivalent uniform annual cost of the new buses if they have negligible market value after 15 years? (5.5)

Accepted Answer

Investment cost of new buses [latex]=35(\$ 40,000-\$ 5,000)=\$ 1,225,000[/latex]

Annual fuel + maintenance [latex]=\$ 144,000-\$ 10,000=\$ 134,000[/latex]

[latex]\operatorname{EUAC}(6 \%)=\$ 1,225,000(A / P, 6 \%, 15)+\$ 134,000=\$ 260,175[/latex]

Question 5.T-Y-S.H: Anderson County has 35 older-model school buses that will be...

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