City Towing is considering the purchase of a tow truck. The garage currently has no tow truck, and the $100,000 price tag for a new truck would be a major expenditure. Thus, the owner is determining whether he should buy a brand-new truck or a used truck that is in excellent condition with very low mileage. Either truck has a useful life of 10 years. The used truck has a larger towing capacity and thus could bring in slightly greater amounts of revenue (the company can charge more for towing large vehicles such as semi- trucks). The owner of the garage has compiled the following estimates in trying to determine which tow truck should be purchased:

	New Truck	Used Truck
Purchase of sewing machine	$100,000	$80,000
Salvage value	$25,000	$15,000
Additional net inflows per year	$20,000	$21,000
Repairs required at the end of year 5	$4,000	$10,000
Minimum required return on investments	11%	11%