Question: 1

XYZ Construction Inc. wants to purchase a new pick-up truck. The price for the new truck is $43,150. The dealer allows XYZ to trade-in the old truck for $5,109. XYZ can payback the remaining balance through a 4-year payment plan. Given the agreed interest rate is 3%:

How much is the monthly payment?

Question :2

If XYZ can only pay $897 monthly, and the dealer does not accept trade-in, given 3% interest rate, how much of the new pick-up truck can XYZ afford?

Question : 3

On second thoughts, XYZ decides to keep the old truck. They can choose to retrofit it or not. The retrofit will cost $3,168. After the retrofit, the annual fuel and maintenance cost will be $784 for the first year and increases by $170 each year.

XYZs minimum attractive rate of return is 4%. If XYZ will get rid of the old truck in six years, what is the total present cost of retrofit?

Question : 4

Without the retrofit, the annual fuel and maintenance cost will be $2,027 for the first year and increases at a rate of 6% each year. Given XYZs minimum attractive rate of return is still 4%. If XYZ will get rid of the old truck in six years, what is the total present cost of not retrofit?