A new delivery truck can be purchased for $30,000. The old one could be sold today for $5,000, and has a book value of $3,000. In three years, the old truck will have a salvage value of $1,000 (and no book value). The new truck would be depreciated on a 5-year MACRS schedule. The firms tax rate is 21%.

If the old truck is sold and the new one bought, and the new truck will save the firm $1,000 a year in gas expenses, and assuming the new truck would have a salvage value of $10,000 in year 3, what is the replacement project's NPV if the firms WACC is 15%?

Use

Table 13.1 MACRS Depreciation Schedule

Year		Class
	3 years	5 years	7 years	10 years
1	41.67%	25.00%	17.85%	12.50%
2	38.89%	30.00%	23.47%	17.50%
3	14.14%	18.00%	16.76%	14.00%
4	5.30%	11.37%	11.97%	11.20%
5		11.37%	8.87%	8.96%
6		4.26%	8.87%	7.17%
7			8.87%	6.55%
8			3.34%	6.55%
9				6.56%
10				6.55%
11				2.46%
Total	100.00%	100.00%	100.00%	100.00%