Chapter 16 (a) & (b)

ignment Exercise 16-1 Sheffield Corporation is considering purchasing a new delivery truck. The truck has many advantages over the new truck would cost $51,060. Because of the increased capacity, r $7.400. At the end of 8 years, the company will sell the estimated $ unless it has a payback period that is less than 50% of the asset's estimated useful life. Larry Newton, payback approach, but should also employ the net present value method when evaluating new projects. The comany's cost of caotal is B% (not the least of which is that it runs).The reduced y, the new truck is expected to generate cost savings of e truck for an estimated $28,200. Traditionally the company has used a rule of thumb that a proposal should not be accepted a new manager, has suopested that the company should not rely solely on the Click here to viow PV table. Compute the cash payback period and net present value of the proposed investment. (Il the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer for present value to 0 decimal places e-g. 125. Round answer for Payback period to i decimaf place e. 10.5. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Cash payback period years Net present value Does the project meet the company's cash payback criteria? Does it meet the net present value criteria for acceptance? All Rights Reserved. A Drvision of atoule.ASonIJ% 646 PM to search