Question: please help! Net Present Value Method On Time Delivery Inc. is considering the purchase of an additional delivery truck for $85,000 on January 1, 20Y4.

please help!
please help! Net Present Value Method On Time Delivery Inc. is considering
the purchase of an additional delivery truck for $85,000 on January 1,

Net Present Value Method On Time Delivery Inc. is considering the purchase of an additional delivery truck for $85,000 on January 1, 20Y4. The truck is expected to have a fe-year with an added value of $8,000 at the end of five years. The expected additional revenues from the added delivery capacity are antipated to be $70.000 per year for each of the next driver will cost $25,000 in 2014, with an expected annual salary increase of $1,000 for each year thereafter. The operating costs for the truck is estimated to cut 50,000 pery Present Value of $1 at Compound Interest Year 6% 109 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 0.890 0.825 0.792 0.756 0.694 0.540 0.750 0.712 6.65 0.579 4 0.792 0.683 0.635 0.572 0.482 5 0.747 0.521 0.567 0.497 0.402 0.705 0.554 0.507 0.432 0.335 2 7 0.665 0.513 0,452 0.376 0:279 8 0.627 0.404 0327 0.230 9 0.592 0.424 0.363 0.114 0.284 0.247 10 0.55 0.356 0.322 0.362 a. Determine the expected annual met cash flows from the delivery truck westment for 2014-2018. f required, use the minus sont indicate an overall out how R .. Determine the expected annual net cash Nows from the delivery truck investment for 2014-2018 1 required, use the minus sign to indicate an overall regatve na tom outflow, Annual Net Cash Flow 2014 36,000 2015 35,000 2016 34,000 2017 33,000 2018 40,000 b. Calculate the net present value of the investment, assuming that the minimum desired rate of return is 24. Use the table of present value of si provided above Present value of annuat net cash flow Investment 85,000 Net present value Which of the following statements regarding the additional truck investment is true The total present value of cash flows from the delivery truck investment is less than the total purchase price of the truck b. The total present value of cash flows from the delivery truck investment is greater than the total purchase price of the truck c. The total present value of cash flows from the delivery truck investment is equal to the total purchase price of the truck d. The annual net cash flows from 2014 to 2018 are all less than $30,000

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!

Q:

\f