Asset Replacement

Darn Co

Darn Co has undertaken market research at a cost of $200,000 in order to forecast future cash flows of an investment project with an expected life of four years, as follows:

Calvic Co

Calvic Co services custom cars and provides its clients with a courtesy car while servicing is taking place. It has a fleet of 10 courtesy cars which it plans to replace in the near future. Each new courtesy car will cost $15,000. The trade-in value of each new car declines over time as follows: