# Rapid Delivery, Inc. is considering the purchase of an additional delivery vehicle for $38,000 on January 1,

## Question:

(a) Determine the expected annual net cash flows from the delivery truck investment for 2010–2014.

(b) Calculate the net present value of the investment, assuming that the minimum desired rate of return is 12%. Use the present value of $1 table appearing in Exhibit 1 of this chapter.

(c) Is the additional truck a good investment based on your analysis?

Net Present Value

What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...

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