You are the analyst for a Pistol Pete's Pizza Palace, a restaurant that is thinking of expanding their business to include catering for at least the next three years. To take on this project, the restaurant would need to purchase a van to transport food to customer locations. Two options are being explored. Purchasing a new van that is ready to go, or purchasing a used van that would require some customization, which would add to the initial cost. With respect to these figures, experience suggests that the expected life for the project would be 3-years, based on IRS rules. The company will depreciate the equipment using the MACRS over the life of the project. Both vans would be sold at the end of the project. The projected salvage value for the new van would be $25,000 at project end, while the used van could be expected to have a value of $10,500. A working capital requirement would arise at the time of the investment but would be released upon the termination of the project. For the old van, working capital would increase by $3,500 and for the new van, working capital would increase by $2,000. In addition to the cost estimates, expected earnings for the two investments would be as follows: Because this will increase their volume, food costs will also go up. For the used van, they'll spend an additional $5,000 per year and for the new van food cost will increase by $6,000 per year