Net Present Value Method for a Service Company AM Express Inc. is considering the purchase of an additional delivery vehicle for $55,000 on January 1, 20Y1. The truck is expected to have a five- year life with an expected residual value of $15,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $58,000 per year for each of the next five years. A driver will cost $42,000 in 20Y1, with an expected annual salary increase of $1,000 for each year thereafter. The annual operating costs for the truck are estimated to be $3,000 per year. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.8930.870 0.833 2 0.890 0.826 0.7970.7560.694 3 0.840 0.751 0.7120.6580.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 0.705 0,564 0,507 0.4320.35 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 04 0.162 a. Determine the expected annual net cash flows from the delivery truck investment for 20Y1-20ys Annual Net Cash Flow 20Y1 20Y2 20Y3 20Y4 20YS b. Calculate the net present value of the investment, assuming that the minimum desired rate of return is 12%. (If required, round to the nearest dollar.) Use the table of the present value of $1 presented above. If required, use the minus sign to indicate a negative net present value. Present value of annual net cash flows Year 6% 10% 12% 15% 20% 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 70.665 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 a. Determine the expected annual net cash flows from the delivery truck investment for 20Y1-20S. Annual Net Cash Flow 20Y1 20Y2 20Y3 20Y4 20YS b. Calculate the net present value of the investment, assuming that the minimum desired rate of return is 12%. (If required, round to the nearest dollar.) Use the table of the present value of $1 presented above. If required, use the minus sign to indicate a negative net present value. Present value of annual net cash flows Investment Net present value c. 1s the additional truck a good investment based on your analysis? No V ,because the net present value is negative v