Bilboa Freightlines, $S.A.,of$ Panama, uses a truck for intracity deliveries that has worn out and must $be$ overhauled $or$ replaced. The

company assembled the following information:

$If$ the company overhauls its present delivery truck, then $it$ will $be$ usable for five more years. $If$ a new truck $is$ purchased, $it$ will $be$ used

for five years and then traded $in$ for another truck. The new truck would $be$ diesel$-$operated, resulting $in$ lower annual operating costs,

$as$ shown above.

The company computes depreciation $on$ a straight$-$line basis and uses $a12\%$ discount rate.

Click here $to$ view Exhibit $12B-1$ and Exhibit $12B-2,to$ determine the appropriate discount factor$(s)$ using tables.

Required:

What $is$ the net present value $of$ the "keep the old truck" alternative?

What $is$ the net present value $of$ the "purchase the new truck" alternative?

Should Bilboa Freightlines keep the old truck $or$ purchase the new one?