Adams County has $98$ older model school buses that carry a salvage value $($today$)$ of $$7\mathrm{.}600$ each. The county officials are contemplating replacing all the buses with $90$ new larger ones, each costing $$130,000.$

If the county decides to keep the existing fleet, it will need to spend an additional $$11,000$ per bus to refurbish them. Half of the existing fleet will be refurbished immediately, and the other half at the end of $1$st year.

Project Life: $10$ years

Bus Operations:

The busses operate $($on the average$)300$ days per year.

Average travel distance: Existing Fleet $43$ miles$/$day$/$bus$.$ New Fleet $46$ miles$/$day$/$bus$.$

Fuel Efficiency: Existing buses $7\mathrm{.}2$ mpg$,$ new buses $10\mathrm{.}5$ mpg$.$

Fuel Price: Fuel is assumed to cost an average of $$4\mathrm{.}00/$gallon in the $1$st year and escalate at $6\%$ per year.

Manpower:

Driver wages are a major cost item. Other cost items are negligible and are not provided.

Current Fleet: Requires $92$ drivers each working an average of $4$ hours$/$day for $300$ days.

New Fleet: Requires $84$ drivers each working an average of $4$ hours per day for $300$ days.

Driver wages: $$20/$hour in the $1$st year and escalating at $4\%$ per year

Routine Bus Maintenance:

Routine Maintenance costs $($like insurance, oil change etc.$)$ is estimated to be:

$$9,000$ per year per bus for the existing fleet.

$$8,000$ per year per bus for the new fleet.

The maintenance costs are expected to escalate at $4\%$ per year.

Bus Repair Costs

Bus repair costs include irregular items not covered by warranty $$ like repair of exhaust systems, brakes etc.

$$2,000$ per year per bus for the existing fleet for the $1$st year, escalating at $5\%$ per year

$$0$ per year per bus for the new fleet for first $5$ years $($covered by $5-$year warranty$),$ followed by $$1,000$ for the $6$th year. Afterwards it is expected to grow at $5\%$ per year.

Salvage Value:

The expected salvage value at the end of the project life:

New bus $=$ $$13,000$ each. Existing Bus $=$ $$0$ each.

The county uses Cost of Capital $($MARR$)($i$.$e$.,$ interest rate$)$ of $7\%.$

Determine:

Net Present Value of keeping the existing fleet.

Net Present Worth of acquiring the new fleet.

Difference in Net Present Value of $($New $$ Old$)$ fleet.

Difference in Net Annual Value of $($New $$ Old$)$ fleet.

Write a brief that includes evaluation of the two alternatives. Even though your brief will focus on financial results, use your knowledge and imagination to include non$-$financial factors in your brief. Keep the brief concise $$ less than half page. I am not looking for a lengthy discussion.