Question: Net Present Value Method for a Service Company AM Express Inc, is considering the purchase of an additional delivery vehicle for $33,000 on January 1,

 Net Present Value Method for a Service Company AM Express Inc,

Net Present Value Method for a Service Company AM Express Inc, is considering the purchase of an additional delivery vehicle for $33,000 on January 1, 20Y1. The truck is expected to bave a 5 . year life with an expected residual value of $5,000 at the end of 5 years. The expected additional reverues from the added delivery capacity are anticipated to be $65,000 per year for each of the next 5 years. A driver will cost $46,000 in 20y, with an expected annual salary increase of $4,000 for each year thereafter, The annual operating costs for the truck are estimated to be $2,000 per yean Present Value of $1 at Compound Interest a. Determine the expected annual net cash flows from the delivery truck investment for 20r1-20r5. b. Compute the net present value of the investment, assuming that the minimum desired rate of return is 20%. 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 neqative net present value. c. Is the additional truck a good investment based on your analysis

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