Kingbird Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's
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Kingbird Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current truck not the least of which is that it runs The new truck would cost $ Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $ At the end of eight years, the company will sell the truck for an e Lirnated $ Traditionally, the company has used a general rule that it should not accept a proposal unless it has a payback period that is less than of the asset's estimated useful life. Donald Robinson, a new manager, has suggested that the company should not rely only on the payback approach but should also use the net present value method when evaluating new projects. The company's cost of capitalis Calculate the cash payback period and net present value of the proposed inves tment. If the net present value is negative, use either a negative sign preceding the number eg or parentheses eg Round cash paybock period to decimal place, eg For calculation purposes, use decimal places as displayed in the factor table provided, eg and net present value to decimal places. es Click here to view the factor table.
Related Book For
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1118856994
4th Canadian edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly
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