Question 1 Strubal Landscaping Company is thinking of replacing its old tractor with a brand-new state-of-the-art tractor. The old tractor has a historical cost of $50,000 and accumulated amortization of $46,000, but has a current trade in value of $20,000. It currently costs $3,000 per month to operate the old tractor. The old tractor has a remaining useful life of four years, at which time the estimated disposal price will be $6,000. Both tractors require an investment of $6,500 for working capital. The new tractor should reduce operating costs by $20,000 per year for the first two years and by $7000 per year for years three and four. The new tractor has a useful life of four years and will cost $55,000 to purchase. It will have a salvage value of $21,000 at the end of its four-year useful life. Unfortunately, the new tractor will require a $14,000 major overhaul at the end of year two. The new tractor will be amortized on a units of output basis using the estimated hourly usage of 2080 hours per annum. The company requires a 10% rate of return on all investments. Required: Calculate the IRR for the new tractor