4 10 points eBook Print References 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 either overhauled or replaced with a new truck. The company has assembled the following Information (Panama uses the U.S. dollar as its currency): Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value now Salvage value eight years from now Present Truck $ 41,000 26,000 Purchase the new truck Keep the old truck 10,500 12,500 15,500 3,400 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 shown above. New Truck $ 56,500 The company computes depreciation on a straight-line basis. All Investment projects are evaluated using a 16% discount rate. Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Present Value of Net Cash Flows O Purchase the new truck O Keep the old truck 10,500 6,400 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?

Brooa Freightlines, 5 A of Panama has a small tuck that is uses for local deliveries. The truck is in bad repair and must be either overhauled or teplaced with a new truck. The company has assembled the following information (Panama uses the US. dollar is its currency): If the compary keeps and overhauts its present deivery truck, then the truck wir be usable for eight more years if a new truck is purchased, it wil be used for eight yeais, afer which it wil be traded in on another truck. The new truck would be diesel fuelled. fesulting in a substantial reduction in annual operating costs, as shown above. Cick here to view Exhibit 10-1 and fahibit 10-2, to determthe the appropelate discount factor(s) using tabies. Required: 1.0. Determine the present value of net cash fows using the totalcost approach. (Negotive amounts should be indicated with a minus sign, Pound discount foctor(s) to 3 decimal place.) 1.b. Should biboa fieightines keep the oid tuck or purchase the hew one? Puichase the new truck Keep the asd truck 1-b. Should Bliboa Freightlines keep the old truck or purchase the new one? Purchase the new truck Keep the old truck 2. Using the incremental-cost approach, determine the net present value in favor of (or against) purchasing the new truck? (Negative omounts should be Indicated with o minus sign, Round discount foctor(s) to 3 decimal ploce.)