QUESTION C A local authority's Fire Service is considering replacement of a turntable ladder which although still serviceable, has steeply rising maintenance costs, and it is thought that a replacement will proof less expensive in the long term. The purchase cost of a new turntable ladder will be $360,000 - half payable immediately and half one year from now. The following information is available: - Existing 8 Years 8 years Replacement 8 Years 8 years Estimated useful life Estimated costs: Year 1 40,000 10,000 Year 2 45,000 10,000 Year 3 50,000 14,000 Year 4 60,000 15,000 Year 5 72,000 18,000 Year 6 80,000 18,000 Year 7 90,000 20,000 Year 8 98,000 22,000 Full Overhauls Year 2 5,000 Year 4 10,000 4,000 Year 6 14,000 Estimated Resale Value Now 10,000 Year 8 1,000 maintenance 8,000 The local authority applies a cost of capital of 5% in evaluating capital investment proposals. REQUIRED: a) Find the net present value of the differential cash flows attaching to purchase of the new turntable ladder, and on that basis, advise the local authority as to the best course of action. (20 marks) b) Discuss three (3) qualitative factors which may be relevant to the final decision, providing a brief explanation of the significance of each