Speedy Pty Ltd operates a suburban delivery business. It is considering the replacement of a 2-ton van with a 3-ton van. Details of the respective vehicles are as follows:

2-ton truck 3-ton truck Remaining life 3 years Estimated life 4 years Salvage Value now $4,000 |Salvage Value in 4 years $2,000 Salvage Value in 3 years $0 |Annual Depreciation for tax $6,000 purposes Written down value now $7,600 Cost $24,000 Annual Depreciation for tax $2,200 purposes Annual net cash flows before tax $14,000 | Annual net cash flows before tax $22,000