Question: 1)the net present value method is used to evaluate capital investment. imagine you are considering purchasing a new delivery truck for your business. The truck
1)the net present value method is used to evaluate capital investment. imagine you are considering purchasing a new delivery truck for your business. The truck should be useable for five years and the companys discount rate is 10% Consider the following:
Initial purchase price: 80,000
You can sell the truck for 5000 at the end of the five years
The new truck will provide 25,000 in cash flows each year
How would your account for each of the three factors in your net present value calculation? Why does it make sense to account for each the way you describe?
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