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4. A delivery service feels they could increase their profits by purchasing a new truck for $55,500. This should lead to increased profits of $17,000

4. A delivery service feels they could increase their profits by purchasing a new truck for $55,500. This should lead to increased profits of $17,000 in the 1st year, $13,500 in the 2nd year, and $11,500 in the 3rd year. It could sell the truck at the end of 3 years for $13,500.

a. If the company's required rate of return is 6.5% compounded annually, what is the Discounted Cash Flow (DCF) of the net returns?

b. Is this a worthwhile investment?

a. Yes

b. No

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