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2. A city has learned that by buying larger garbage trucks, it could reduce labor costs for garbage removal. Note: All the dollar amounts below
2. A city has learned that by buying larger garbage trucks, it could reduce labor costs for garbage removal. Note: All the dollar amounts below are in this year's dollars (constant dollars). I Cost of the trucks today is $400,000. I Annual savings in this year's constant dollars is $90,000. I Trucks Will last for 4 years and then will be sold for $100,000. I The city can borrow money at a 7% discount rate to purchase the trucks. I Ination (for the next 4 years) is expected to average 3%. Assuming the costs and benets are incurred at the end of the year, should the city buy the trucks
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