On second thoughts, XYZ decides to keep the old truck. They can choose to retrofit it or not. The retrofit will cost $3,762. After the retrofit, the annual fuel and maintenance cost will be $788 for the first year and increases by $111 each year. XYZ’s minimum attractive rate of return is 4%. If XYZ will get rid of the old truck in six years, what is the total present cost of retrofit?

Without the retrofit, the annual fuel and maintenance cost will be $2,064 for the first year and increases at a rate of 8% each year. Given XYZ’s minimum attractive rate of return is still 4%. If XYZ will get rid of the old truck in six years, what is the total present cost of not retrofitting?

Answer rating: 100% (QA)

To calculate the present cost of retrofit you need to use the present value formula The formula is P... View the full answer