60. (Time line; payback; NPV) Fred’s Freightline is considering the purchase of a new van to replace an existing truck. The van would cost $35,000 and would have a life of seven years with no salvage value at that time. The truck could be sold currently for $4,000; alternatively, if it is kept, it will have a remaining life of seven years with no salvage value. By purchasing the van, Fred’s would anticipate operating cost savings as follows:

Year Amount 1 $6,300 2 7,100 3 7,200 4 7,000 5 7,000 6 7,100 7 7,200 Fred’s cost of capital and capital project evaluation rate is 12 percent.

a. Construct a time line for the purchase of the van.

b. Determine the payback period (ignore tax).

c. Calculate the net present value of the van (ignore tax).