Additional Practice Question: NPV Method Ene g Sa is Ta The Tour Guide Company of Addis, Boyle and Wylie is considering the purchase of a new van to replace its old van. The new van would cost $30,000 today and it has an estimated useful life of 6 years wihave expected salvage value of $4,000. The old van could be sold today for $2,000. The new van would have yearly operating costs of $10,000 per year. The old van currently costs $16,000 per year to operate. The new van is also larger than the old one and will result in an additional 1,000 more tourists each year Each tourist pays the company $3.00 per tour. Finally, at the end of the third year the new van would $ require an overhaul at a cost of $5,000. Required: Using the format below, determine if the new van is a good investment. Use the NPV technique and assume the company's cost of capital is 12%. Item Year(s) Having Cash Flows Amount of Cash Flows PV Discount Factor @ 12% PV of the Cash Flow Net Present Value $ Accept or reject? Why? 104