A city has learned that by buying larger garbage trucks, it could reduce labor costs for garbage removal. Note: All the dollar amounts below are in this year's dollars (constant dollars).
Cost of trucks today is $400,000.
Annual savings in this year's constant dollars is $90,000.
Trucks will last for 4 years and then will be sold for $100,000.
Discount rate is 3%
Assuming the costs and benefits are incurred at the end of the year, should the city buy the trucks?