5. Problem 13.05 (Abandonment Option) eBook Problem Walk-Through The Scampini Supplies Company recently purchased a new delivery truck. The new truck has an after-tax cost of $24,500, and it is expected to generate after-tax cash flows of $6,250 per year. The truck has a 5-year expected life. The expected year-end abandonment values (after-tax salvage values) for the truck are given below. The company's WACC is 8%. After-Tax Year Annual After-Tax Cash Flow 0 ($24,500) 1 6,250 2 6,250 3 6,250 4 5 6,250 6,250 a. What is the truck's optimal economic life? Round your answer to the nearest whole number. year(s) Abandonment Value $20,500 17,000 13,000 8,000 0 b. Would the introduction of abandonment values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project? -Select