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Business, 15.04.2021 19:30 walkinginmypurpose

An independent contractor for a transportation company needs to determine whether she should upgrade the vehicle she currently owns or trade her vehicle in to lease a new vehicle. If she keeps her vehicle, she will need to invest in immediate upgrades that cost $5,200 and it will cost $1,350 per year to operate at the end of year that follows. She will keep the vehicle for 3 years; at the end of this period, the upgraded vehicle will have a salvage value of $4,500. Alternatively, she could trade in her vehicle to lease a new vehicle. She estimates that her current vehicle has a trade-in value of $9,900 and that there will be $4,300 due at lease signing. She further estimates that it will cost $3,300 per year to lease and operate the vehicle. The independent contractor's MARR is 11%. Compute the EUAC of both the upgrade and lease alternatives using the insider perspective.

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