The management of a private transportation company is interested in reducing the carbon footprint of their company by replacing several old trucks. These include four (4) Class 8 Volvos, thirteen (13) on-highway Volvo trucks, and twenty-seven (27) Freightliners. The company may either replace the ageing trucks with new ones of the same kind OR replace them with electric Semi trucks from Tesla.

The first alternative involves scrapping all old trucks and purchasing forty-four (44) new Volvo and Freightliners models and planting 150,000 trees (to offset carbon usage).

The second option involves scrapping all old trucks and purchasing thirty-one (31) Tesla models along with related equipment.

The following variabilities in estimates should be considered: Variable Minimum Maximum Revenues -15% +20% Labour cost -35% +10% O and M cost -5% +30%The table below shows the revenue and expense predictions: description alternative 1 alternative 2 machinery/ related equipement $2580000 $1750000 annual revenues due to the new trucks $2400000 $2260000 annual labour costs $234000 $385000 annual O and M cost $790000 $650000 CCA rate 24.4% 24.4% project life 15 years 15 years salvage value $350000 $460000