Your company has five delivery trucks that are getting old and only have two years of...
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Your company has five delivery trucks that are getting old and only have two years of useful life left in them. As they are not fuel efficient and need a lot of repairs, they generate net cash flow for the firm of only $25,000 per year. Five new trucks will cost $250,000, but they will generate net cash flow for the firm of $75,000 per year for five years. At the end of five years they will no longer be usable and will have no value. If the appropriate risk adjusted discount rate is 8% what is the net present value of the project? Your company has five delivery trucks that are getting old and only have two years of useful life left in them. As they are not fuel efficient and need a lot of repairs, they generate net cash flow for the firm of only $25,000 per year. Five new trucks will cost $250,000, but they will generate net cash flow for the firm of $75,000 per year for five years. At the end of five years they will no longer be usable and will have no value. If the appropriate risk adjusted discount rate is 8% what is the net present value of the project?
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To calculate the net present value NPV of the project we need to discount the cash flows from the ne... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
Posted Date:
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