(1022) Economic Life The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost...

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(10–22)

Economic Life The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given below. The company’s cost of capital is 10%.

418 Part 4: Projects and Their Valuation Year Annual Operating Cash Flow Salvage Value 0 −$22,500 $22,500 1 6,250 17,500 2 6,250 14,000 3 6,250 11,000 4 6,250 5,000 5 6,250 0

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Financial Management Theory And Practice

ISBN: 9781439078105

13th Edition

Authors: Eugene F. Brigham, Michael C. Ehrhardt

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