A number of huge trucks are owned by the National Transport Company. One of the trucks is in horrible condition and requires a $100,000 restoration right away. In six years, an engine overhaul will be required at a cost of $10,000. The truck will be functional for 12 years if these costs are incurred. It will be sold at a salvage value (scrap value) of $30,000 after a 12-year term. The truck's salvage value is currently set at $35,000. The truck's total annual revenues will be $200,000, but its entire operating costs will be $150,000 per year.

Alternatively, National Transport Company can spend $180,000 on a new truck. The new truck will require $5,000 in repairs at the conclusion of the 6-year period. After a 12-year useful life, its salvage value will be $30,000. The new truck's total annual profits will be $200,000, and its annual running costs will be $110,000.

The required rate of return for the corporation is 15% before taxes.

Is it necessary for National Transport Company to renovate the old truck or buy a new truck? For your solution, consider the following approaches to net present value (NPV) analysis:

1. Total cost approach.
2. Incremental cost approach.

(Ignore income tax in your computations.)