Sheet $10$: Replacement

For immediate launch a currently owned diesel bus originally costing $$390,000$ will be utilized. It is projected to have $7$ years remaining with a market value of $$345,000$ today, decreasing by $$35,000$ a year. The labor and revenues are expected to be the same but operation costs initially twice as much as the BAT and increase $5\%$ annually with maintenance costs of $$16,000$ increasing by $$3500$ a year.

If the BAT trolley operations are to increase by $$9000$ a year and maintenance overhauls of $$14,750$ every $4$ years, when do you recommend replacing the diesel bus at a MARR of $12\%?$