Question $3$

On second thoughts, XYZ decides to keep the old truck. They can

choose to retrofit it or not. The retrofit will cost $$3,696.$ After the

retrofit, the annual fuel and maintenance cost will be $$640$ for the

first year and increases by $$103$ each year.

$xYZ\text{'}$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?

Question $4$

Without the retrofit, the annual fuel and maintenance cost will be

$$1,911$ for the first year and increases at a rate of $9\%$ each year.

Given $xYZ\text{'}$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?