Question: I need help finding net present value Cosst-to-Coast Inc is considering the purchase of an additional delivery vehicle for $47,000 on January 1,20Y1. The truck

I need help finding net present value  I need help finding net present value Cosst-to-Coast Inc is considering
the purchase of an additional delivery vehicle for $47,000 on January 1,20Y1.
The truck is expected to have a 5 -year life with an

Cosst-to-Coast Inc is considering the purchase of an additional delivery vehicle for $47,000 on January 1,20Y1. The truck is expected to have a 5 -year life with an expected residual value of $5,000 at the end of 5 years. The expected additional revenues from the added delivery capacity are anticipated to be $75,000 per year for each of the next 5 years. A driver will cost $1,000 in 20x1, with an expected annual salary increase of $4,000 for each vear thereafter. The annual operating costs for the truck are estimated to be $3,000 per year. This information has been collected in the Microsont Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Determine the expected annual net cash flows from the delivery truck investment for 20 r1-20Ys. b. Compute the net present value of the investment, assuming that the minimum desired rate of return is 20%. When required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Net present values Present Value of $1 at Compound Interest \begin{tabular}{cccccc} \hline Year & 6% & 10% & 12% & 15% & 20% \\ \hline 1 & 0.943 & 0.909 & 0.893 & 0.870 & 0.833 \\ 2 & 0.890 & 0.826 & 0.797 & 0.756 & 0.694 \\ 3 & 0.840 & 0.751 & 0.712 & 0.658 & 0.579 \\ 4 & 0.792 & 0.683 & 0.636 & 0.572 & 0.482 \\ 5 & 0.747 & 0.621 & 0.567 & 0.497 & 0.402 \\ 6 & 0.705 & 0.564 & 0.507 & 0.432 & 0.335 \\ 7 & 0.665 & 0.513 & 0.452 & 0.376 & 0.279 \\ 8 & 0.627 & 0.467 & 0.404 & 0.327 & 0.233 \\ 9 & 0.592 & 0.424 & 0.361 & 0.284 & 0.194 \\ 10 & 0.558 & 0.386 & 0.322 & 0.247 & 0.162 \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!