The City of San Jose must replace a number of its concrete mixer trucks with new trucks.  It has received two bids and has evaluated closely the performance characteristics of the various trucks.  The Rockbuilt truck, which costs $74,000, is top-of-the-line equipment.  The truck has a life of 8 years, assuming that the engine is rebuilt in the fifth year.  Maintenance costs of $2,000 a year are expected in the first 4 years, followed by total maintenance and rebuilding costs of $13,000 in the fifth year.  During the last 3 years, maintenance costs are expected to be $4,000 a year.  At the end of 8 years the truck will have an estimated scrap value of $9,000.

A bid from Bulldog Trucks, Inc. is for $59,000 a truck.  Maintenance costs for the truck will be higher.  In the first year they are expected to be $3,000, and this amount is expected to increase by $1,500 a year through the eighth year.  In year 4 the engine will need to be rebuilt, and this will cost the company $15,000 in addition to maintenance costs in that year.  At the end of 8 years the Bulldog truck will have an estimated scrap value of $5,000.

Required:

What are the relevant cash flows related to the truck of each bidder? What are the cash-flow savings each year that can be obtained by going with the more expensive truck? Please explain your answer and also provide examples