14-28 (Algo) Net Present Value Analysis [LO14-2] Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value-five years from now Salvage value-now Present Truck $ 36,000 New Truck $ 49,000 $ 24,000 $ 23,000 $ 18,000 $13,000 $16,500 $ 10,000 $8,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate. Click here to view Exhibit 148-1 and Exhibit 148-2. to determine the appropriate discount factor(s) using tables. Required: 1. What is the net present value of the "keep the old truck" alternative? 2. What is the net present value of the "purchase the new truck" alternative? 3. Should Bilboa Freightlines keep the old truck or purchase the new one? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 EXHIBIT 148-1 Present Value of $1.1(1+r) Periods 44 5% 6% 796 0.962 095 0943 0.935 2 0.925 0.907 0.890 0.873 816 9% 0.926 0.917 0.857 0.842 3 0.889 0.864 0.840 816 4 0.655 0823 0.792 0.822 0.764 0.747 6 0790 0.746 0.705 7 0.760 0.711 0.665 0761 0713 0681 0666 0630 0623 0.583 N 9 10 11 12 13 0.650 0.585 0.527 0.475 0429 0.625 0557 0.497 0444 0.397 0401 0530 0409 0415 0.36 0.388 0.356 14 15 16 17 18 130 0.111 0.095 0.0K 19 0.116 0.098 0.083 0.070 20 21 22 23 24 25 0.074 26 27 28 0.207 0.196 29 30 40 10% 11% 12% 1.3% 14% 15% 16% 1794 18% 19% 20% 21% 22% 2316 24% 2596 0909 0.901 0.893 0.85 0.877 0.870 0.862 0.855 0847 0.840 0833 0.826 0820 0313 08060100 0326 0812 0.797 0.783 0.769 0.75 0.743 0,731 0718 0.706 0694 0.683 0.672 0.661 0650 0.640 0.794 0.772 0.751 0.731 0712 0.093 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.324 0.512 0.735 0.208 0.683 0659 0.636 0.61) 0.392 0.372 0.552 0.534 0.516 0.499 0.452 0.467 0451 0.437 0.423 0.410 0.650 0.5621 0.595 0567 0.541 0519 0497 0.476 0.456 0437 0419 0.402 0.386 0.370 0.555 0.341 0.328 0.596 0.564 0.535 0507 0.480 0.456 0.432 0410 0.390 0.370 0.352 0.335 0319 0303 0.289 0375 0.262 0.547 0,513 0.482 0.452 0.425 0.400 0.376 0354 0.333 0.314 0.296 0279 0263 0.249 0235 0222 0210 0.731 0677 0.627 0.582 0.540 0.502 0.467 0.434 0404 0.376 0351 0.327 0.305 0.285 0.266 0.249 0.233 0.218 0204 0191 0.179 0.168 0.703 0645 0.592 0.544 0.500 0.460 0.424 0.391 0361 0.333 0.30 0.284 0263 0.243 0.225 0.209 0.194 0.180 0167 6.155 0.144 | 0.134) 0676 0614 0.55% 0.50% 0.463 0.422 0.386 0.352 0322 0.295 0270 0.247 0.227 0,208 0191 0.176 0.162 0.149 0.137 0126 0.116 0.107 0.350 0.317 0287 0.261 0217 0.215 0.195 0.17 0.16 0.14 0.135 0.12) 0.112 0.103 0.094 0.006 0319 0.286 0.257 0231 0.208 0.187 0.16% 0.152 0.137 0.124 0.112 0.102 0.092 0.03 0.076 0.069 0.326 0.290 0.25 0.229 0.204 0182 0.163 0.145 0.130 0.116 0.104 0.093 0.084 0.075 0.068 0.061 0.015 0.57 0.505 0.44 0.388 0340 0.299 0.263 0232 0205 0.18 0.160 0141 0125 0111 0.099 0.085 0078 0.069 0.062 0.055 0.049 0.044 0.555 0.481 0417 0.362 0.315 0275 0.259 0,209 0.483 0.160 0.140 0.12) 0.108 0.095 0.04 0.074 0.065 0.057 0.051 0.045 0.040 0015 0.534 0.458 0.394 339 0.292 0252 0218 0,188 0163 0.141 0.123 0.107 0.093 0.08 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0313 0.436 0.371 0317 0270 0.251 0.198 0.170 0.146 0.125 0.108 0.093 0.080 0.069 | 0060 0.052 | 0.045 0.039 0.034 0.050 0.026 0.023 0.494 0416 0.350 0.296 0.250 0.212 0180 0.153 0.009 0.059 0.051 0.044 0.0381 0.012 0.028 0.024 0.021 0.018 0.475 0.396 0331 0.277 0.232 0.194 0.164 0.138 0.060 0.051 0.043 0.037 0.031 0.027 0.025 0.020 0.017 0.014 0.456 0.377 0312 0258 0215 0.178 0.149 0.124 0104 0.087 0.073 0.061 6051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 0.014 0.012 0.439 0.359 0.294 0.242 0.199 0.164 0135 0.112 0093 0.077 0.064 0.053 0044 0037 0031 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0422 0342 0.278 0.226 0.184 0.150 0123 0101 OOK 0.068 0.056 0.046 0.018 0.032 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.007 0.406 0.326 0262 0.211 0170 0.135 0.112 0.091 0.074 0.060 0.049 0.040 0011 0.027 0022 0.018 0.015 0.012 0.010 0.009 0.007 0.006 390 0.310 0247 0.197 0.156 0.126 0.102 0.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0.015 0.013 B.010 0.00 0.007 0.006 0.005 0375 0.295 0233 0.184 0146 0.116 0.092 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.006 0.009 0.007 0.005 0.004 0361 0281 0220 0.172 0115 0106 0084 0.066 0.053 0.042 0.033 0,026 0021 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.037 0.161 0.125 0.098 0.076 0.060 0.047 0.029 01.023 0347 0.268 0,007 0006 0.005 0.004 0.003 0.002 0.006 0333 0.255 0.150 0.116 0.069 0.054 0.090 0,042 0.033 0.026 0.020 0.016 0.012 0.010 0.00 0.005 0.004 0.003 0.002 0.002 0321 0.243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.0022 0.017 0014 0.011 0.008 0.006 0.005 0.007 0.004 0002 0.002 0.002 0003 0.308 0231 0.174 0.131 0.099 0.075 0.057 0,044 0.033 0.026 0.020 0.015 0.012 0.009 0.007 0.005 0.004 0.003 0.005 0208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.001 0.004 0.003 0.002 0.001 0.001 6.000 0.000 0.018 0.014 0.011 0.009 0.002 0.001 1000 0.000 0.000 EXHIBIT 14B-2 Present Value of an Annuity of 51 in Arrears, 1111-1(1+ral Periods 4% 5% 6% 0962 0.952 0.943 2 1.886 1859 1833 3 2715 4 3 6 7 S 9 10 5242 5.076 4.917 6.002 5.786 5.582 6.733 6.463 6.210 7.435 6.802 x311 7.722 7.360 7.108 7.499 7.139 12 13 141 15 16 17 18 8.7568.201 19 13.134 12.085 11.158 10.336 9604 20 21 22 23 24 8.985 8348 23 26 27 28 29 30 40 0806 0800 1.608 1.783 1.759 1.716 1.713 1690 1668 1.647 1.626 1.605 1385 1566 1.547 1.528 1.509 1492 1.474 1.457 1400 1.981 1952 2.723 2.673 2.624 2.577 2.531 2.457 2.444 2.402 2.361 2.322 2283 2.346 2.210 2.174 2.140 2106 2.074 2042 2011 3.630. 3.546 3.465 3.387 3312 3.240 3.170 3.102 3.037 2.974 2914 2.855 2.798 2.743 2.690 2.639 2.589 2540 2494 2.448 4.452 4.329 4.212 4.100 1.993 3.890 3.791 3696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.0 2.991 2.926 2.864 2.803 3.092 3.029 2951 4.767 4.623 4355 4456 4.231 4.111 3.998 3.889 3.784 3.685 3589 3498 3.410 3.326 3245 3.167 5389 5.206 5.033 4.868 4.712 4.564 4423 4288 4.160 4.039 3.922 3.812 3.706 3.605 350 3416 3.327 3.242 3.161 3421 3.954 3.837 3.726 | 3.619 3518 5.9715.747 5.535 5.335 5.146 4968 4.799 4.639 4.487 4.344 4.207 4078 5.328 6315 6.247 5995 5.759 5537 4.946 5.132 4.772 4.607 4.451 4.303 4.163 4031 3.905 3,786 3.673 3.566 3463 7.024 6.710 6418 6.145 5.889 5.650 4.833 5426 5.216 5.019 4659 4494 4.339 4.192 4.054 X923 3799 3.682 3.571 3656 3.902 3.776 760 8306 7.887 6.805 6495 6207 5.938 4177 4035 5.687 5.029 4836 4656 4456 4.327 5453 5.234 4.793 4.611 4439 4278 4.127 3.985 3.851 3,725 9385 8.863 8.384 7.943 7.536 7.161 6814 6.492 6.194 5918 5660 5.421 5.197 4988 4.053 3.912 3.780 9.986 9.394 8.853 8358 7.904 74K7 7.103 6.750 6424 6.122 5842 5.583 5.342 5.118 4.910 4.715 4533 4.362 4.203 5008 6.002 5.724 5.468 5.229 4.302 4611 4432 4.265 4.108 3.962 3824 10.563 9.899 9.295 8345 8.244 7.786 7.367 6982 6628 6302 5.092 4.876 4675 4.489 4315 4353 4001 3.859 11118 10.380 9.712 9.108 359 8.061 7.606 7191 6811 6.462 6142 5847 5.575 5324 11.652 10.838 10.106 9447 8.851 8.313 7.824 7.379 6974 6.604 6.265 5954 5668 5.405 5.162 4918 4.730 4536 4.357 4.189 4.033 3887 12.166 11.274 10.477 9.763 9.122 8.544 8022 1549 7.120 6.729 6373 6047 5.749 5.475 5.222 4.990 4.775 4576 4391 4.219 4059 3.910 6.128 5.818 5.534 5273 5.033 4812 4608 4419 4243 4.080 3928 12.659 11.690 10.828 10.059 9372 7.702 7250 6540 6467 5.584 5.316 5877 5.000 4843 4635 4442 4263 4097 3.942 8950 8.365 7839 7.366 6938 6550 6.198 4460 4.279 4110 3954 2.469 7025 6.623 6.259 5.929 5.628 5.353 5.101 4.570 4657 13.590 12.462 11470] 10.594 9818 9.129 8514 7.963 8649 14.029 12.821 11.764 10.836 10.017 9.292 8.075 7.562 7.102 6.687 6312 5973 5665 5.384 5.127 4391 4.675 4476 4.292 4121 3.963 5410 5349 4909 4690 4458 4302 4.130 3970 14.451 13.163 12.042 11.061 10.201 9.442 8.772 K176 7645 7.170 6743 6359 60115.696 5.723 5432 5167 4925 4.703 4499 4311 4.137 3.976 14.857 13.489 12.303 11.272 10.371 9.580 8883 8.266 7.718 7.230 6.792 6399 6044 4318 4.143 3981 2.784 7.283 6.835 6434 6.073 5746 5.451 5.182 4937 4.713 4507 15.247 13.799 12.550 11.469 10.529 9.707 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7843 7.330 6873 6464 6097 5766 5.467 5.195 4948 4721 4.514 4.323 4.347 4351 3988 8458 9.161 7896 7372 6906 6491 6118 5785 5.450 5.206 4956 4.728 4.520 4.328 15.983 14.375 13.003 11.826 10.810 9.929 4524 4332 4154 3.990 16.330 14.643 13211 11987 10.935 10827 9.237 8548 7.943 7.409 6935 6514 6136 5.798 5.492 | 5215 4.964 4734 4335 4357 3992 3.602 7.984 7441 6961 6.534 6.152 5810 5.502 5223 4970 4.739 4.528 16.66) 14.898 13.406 12.137 11.051 10.116 9.307 4.337 4.159 3994 5.820 5510 5229 4975 4743 4531 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7470 6953 6551 6166 4339 2003 6566 6.177 5829 5317 5235 4979 4.746 4534 17.292 15.372 11.765 12 409 11 258 10.274 9427 8694 8055 7.496 19.793 17.159 15.046 13.312 11.925 10.757 9.779 951 8.244 7.634 2.105 6642 6233 5871 5.548 5.258 4.997 4.760 4544 4347 4166 1999 756 8% 996 10% 11% 12% 13% 14% 0.935 0.926 0.917 0909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0826 0.820 0.813 15% 16% 1796 18% 19% 20% 21% 22% 23% 24% 2556 2404 2362 2.745 2.689 3.329 1965 41603995