Net Present Value Method for a Service Company AM Express Inc. is considering the purchase of an additional delivery vehicle for $38,000 on January 1, 20Y1. The truck is expected to have a five-year life with an expected residual value of $6,000 at the end of five years The expected additional revenues from the added delivery capacity are anticipated to be $55,000 per year for each of the next five years. A driver will cost $39,000 in 20Y1, with an expected annual salary increase of $3,000 for each year thereafter. The annual operating costs for the truck are estimated to be $2,000 per year. Present Value of $1 at Compound Interest 10% 12% 15% 20% 1 0.943 0.9090.893 0.870 0.833 2 0.890 0.826 0.7970.7560.694 3 0.840 0.751 0.712 0.658 0.579 40.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.7050.564 0.507 0.432 0.335 0.6650.513 0.452 0.3760.279 8 0.6270.467 0.404 0.327 0.233 0.3610.284 0.194 10 0.558 0.3860.322 0.247 0.162 Year 6% 7 0.5920.42 a. Determine the expected annual net cash flows from the delivery truck investment for 20Y1-20Y5 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 20Y1-20Y5. 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 6%. Use the table of the present value of $1 presented above. When required, round to the nearest dollar. 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. Is the additional truck a good investment based on your analysis? Yes ,because the net present value is positive v Next Check My Work All work saved Email Instructor Save and Exit Submit Assignment for Grading