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You are an executive at Republic Services, Inc. ( RSG ) and have been approached by the electric vehicle maker, Nikola Corp. ( NKLA )

You are an executive at Republic Services, Inc. (RSG) and have been approached by the electric vehicle maker, Nikola Corp. (NKLA). NKLA has offered to sell you a fleet of their electric garbage trucks for $300,000 each. These trucks are more expensive than the current gasoline-powered trucks, which sell for $200,000 each. However, you are expected to generate significant cost savings with the electric trucks due to lower maintenance and fuel (i.e., electric vs. gas) costs. However, the electric trucks are expected to have a shorter useful life (9 years) due to battery replacement costs when compared to the gas powered trucks (18 years). As a result, assume that annual cash flows generated (per truck) from the use of the electric garbage truck will be $75,000 and $42,500 when using the gas truck. Calculate the NPV and EAC of each investment option using cash flows assuming a purchase of one of each truck. Assume a 10% cost of capital. Write an IF statement that will provide you with your decision as to which truck type to use. In the space below, discuss your decision and the method you used to determine which truck type to purchase.

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