. 1 (5 points). Your company has 2 old trucks that it is considering replacing with one new truck. The new truck is much more efficient than the old ones, and purchasing it will enable the company to fire one of the truck drivers, thus saving $15,000 annually in operating costs. Additional facts: Each old truck has a book value of $3,000 and can be sold for $12,000. The new truck costs $50,000 and will be depreciated on a straight-line basis over 5 years. In year 5 the new truck will be sold for $25,000. The company's tax rate is 30%. The appropriate discount rate is 14%. Answer the following questions: What is the cash flow from replacing the trucks in year O? Compute the cash flow from replacing the trucks in years 1-4. * Compute the cash flow in year 5 (this includes the planned sale of the new truck). What is the formula in cell B21? What is the formula in cell B22? C A B 1 REPLACEMENT PROBLEM 2 Old truck 3 Book value 3,000 4 Market value 12,000 5 New truck 6 Cost 50,000 7 Life (years) 5 8 Pre-tax annual savings 15,000 9 Value, year 5 25,000 10 Tax rate 30% 11 Discount rate 14% 12 13 Year Cash flow 14 0 1