Reference no: EM132532584
The city of San José must replace some of its concrete mixer trucks by new. It has received two offers for tender and has evaluated in detail the characteristics of truck performance. The Rockbuilt model, which costs $ 74,000, is a top team line. It has a life of eight years, assuming the engine is rebuilt in the fifth year. I know expect annual cash flows of $ 2,000 for the first four years, followed by a flow of $ 13,000 in the fifth year. For the past three years, they are expected to be $ 4,000 annually. It is estimated that at the end of eight years the truck will have a salvage value of $ 9,000. An offer from Bulldog Trucks, Inc., is $ 59,000 per truck. Cash flows will be the most high. In the first year they are expected to be $ 3,000 and to increase $ 1,500 each year through eighth. In the fourth year the engine will have to be rebuilt, which will cost $ 15,000 in addition to the costs maintenance that year. It is estimated that at the end of the eight years, the Bulldog will have a cost $ 5,000 ransom.
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