Problem 4 - Capital Budgeting - 7 Marks - 12 Minutes ABC Co. is considering two alternatives to replace a delivery truck. The following data have been gathered concerning these two alternatives: Truck A Truck B Purchase cost new $50,000 $60,000 Major repairs end of year 2 $10,000 $6,000 Annual cash operating costs $20,000 $15,000 $20,000 Salvage value at the end of 3 $15,000 years ABC Co. uses a 12% discount rate and the incremental cost approach to capital budgeting analysis. Both trucks are expected to have a useful life of three years. Required: a) Prepare the incremental cost analysis of the two alternatives. (6 marks) b) If the only decision factor is the difference in net present value, which truck of the two should be purchased? (1 mark)