Suppose a Roofing Contractor Is Considering the Purchase of an Additional

Multiple Choice

Suppose a roofing contractor is considering the purchase of an additional truck at a price of $35 000.He expects the discounted MRP of the truck in Year 1 to be $7000,in Year 2 to be $6000,in Year 3 to be $5000,after which he can sell the truck at a present value of $14 000.This contractor should

A) not buy the truck because its marginal cost is greater than its marginal revenue.
B) be indifferent about the purchase because its present value is approximately equal to its purchase price.
C) buy the truck because its present value is more than its purchase price.
D) not buy the truck because its present value is less than its purchase price.
E) buy the truck because its marginal cost is less than its marginal revenue.