Assume that the Greenvale Senior’s Society purchased a bus two years ago for $200,000. Today, a similar bus can be purch

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Assume that the Greenvale Senior’s Society purchased a bus twoyears ago for $200,000. Today, a similar bus can be purchased for$175,000. Purchasing a new bus today will save the Society $5,000per year in operational costs compared to the bus purchased twoyears ago. Each bus has an estimated useful life of five years andwill be driven 100,000 km per year. If the new bus is purchased,the maintenance contract with the seller will be reduced from$20,000 per 100,000 km of use to $18,000. The old bus can be soldfor $140,000 in one year’s time. In the meantime, it can be used asa temporary replacement vehicle for the new bus if needed. Assumethat no income or other taxes apply and that the maintenancecontract will be paid at the beginning of each year.
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