q. 4

Assignment U 3 4 Bilboa Freightlines, S. A. of Panama has a small truck that it uses for local deliveries. The truck is in bad repair and must be eithet overhauled or replaced with a new truck. The company has assembled the following information (Panama uses the U.S. doilat as its currency): If the company keeps and overhauls its present delivery truck, then the truck will be usable for eight more years. If a new truck is purchased. it will be used for eight years, after which it will be traded in on another truck. The new truck would be diesel-fuelled, resulting in a substantial reduction in annual operating costs, as shdivn above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 16% discount rate: Click here to view Exhibit 101 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables: Riequired: Prev 4 of 7 it Next > Required: 1-a. Determine the present value of net cash flows using the total-cost approach. (Negative amounts should be indicated with a minus sign. Round discount factor(s) to 3 decimal place.) 1-b. Should Bilboa Freightlines keep the old truck or purchase the new one? Purchase the new truck Keep the old truck