8. Problem 12.16 (Abandonment Option) eBook Problem Walk-Through The Sorensen Supplies Company recently purchased a new delivery truck. The initial cash outflow for the new truck is $23,000, and it is expected to generate after-tax cash flows of $6,725 per year. The truck has a 5-year expected. The expected year-end abandonment values (after tax salvage values) for the truck are given below. The company's WACC is 12% Year Annual After-Tax Cash Abandonment Value Flow ($23,000) 6,725 6,725 6.725 6,725 6,725 3 $18,000 15,500 13,500 9,500 0 4 a. What is the trucks optimal economic life? Round your answer to the nearest whole number Year(s) b. Would the introduction of abandonment values, in addition to operating cash rows ever reduce the expected NPV and/or IRR of a project? 5