Question: Help Save & Ext Eat at State is considering buying a new food truck. It will cost $65,000, but is expected to generate $20,000 in
Help Save & Ext Eat at State is considering buying a new food truck. It will cost $65,000, but is expected to generate $20,000 in sales each year over the next 4 years At the end of the 4th year, the truck will be sold to Eat Like a Wolverine In Ann Arbor for $10,000 (after taxes). It will require $5,000 in additional Net Working capital that will not be recovered when the truck is sold. The Dean of Food Services will only authorize the purchase if it is cash positive by the and of the 4th year. Using the payback period method, should the truck be purchased, and why? Do not purchase the initial expense not be recovered in 4 years O recovered in exactly 4 years C) Do not purchase the initial expens O Purchase the truck the initial expenses will be recovered in Year 3 O Purchase the truck the initial expenses will be recovered plus an additional $20,000 by the end of Year Next >
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