answer q3
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: d Present Truck New Truck Purchase cost new $ 23,000 $ 28,000 Remaining book value $ 10,000 Overhaul needed now $ 9,000 Annual cash operating costs $ 11,500 $ 8,000 Salvage value-now $ 5,000 Salvage value-five years from now $ 4,000 $ 4,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years. after which it will be traded in on another truck. The new truck would be diesel- operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate. Click here to view Exhibit 14B-1 and Exhibit 14B-2. to determine the appropriate discount factor(s) using tables. Required: 1. What is the net present value of the "keep the old truck" alternative? 2. What is the net present value of the "purchase the new truck" alternative? 3. Should Bilboa Freightlines keep the old truck or purchase the new one? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the net present value of the "keep the old truck" alternative? (Enter negative am final answer to the nearest whole dollar amount.) Net present value Required 2 > Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: d Present Truck New Truck Purchase cost new $ 23,000 $ 28,000 Remaining book value $ 10,000 Overhaul needed now $ 9,000 Annual cash operating costs $ 11,500 $ 8,000 Salvage value-now $ 5,000 Salvage value-five years from now $ 4,000 $ 4,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years. after which it will be traded in on another truck. The new truck would be diesel- operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables, Required: 1. What is the net present value of the "keep the old truck" alternative? 2. What is the net present value of the "purchase the new truck alternative? 3. Should Bilboa Freightlines keep the old truck or purchase the new one? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the net present value of the "purchase the new truck" alternative? (Enter negativ your final answer to the nearest whole dollar amount.) Net present value Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Present Truck New Truck Purchase cost new $ 23,000 $ 28,000 Remaining book value $ 10,000 Overhaul needed now $ 9,000 Annual cash operating costs $ 11,580 $ 8,000 Salvage value-now $ 5,000 Salvage value-five years from now $ 4,000 $ 4,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel- operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate. Click here to view Exhibit 14B-1 and Exhibit 14B-2. to determine the appropriate discount factor(s) using tables. Required: 1. What is the net present value of the "keep the old truck" alternative? 2. What is the net present value of the "purchase the new truck" alternative? 3. Should Bilboa Freightlines keep the old truck or purchase the new one? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should Bilboa Freightlines keep the old truck or purchase the new one? Purchase the new truck Keep the old truck EXHIBIT 14B-1 Present Value of S1: (1 + Periods 49% 5% 6% 7% 8% 99% 10. 11% 12% 1.3% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 1 0.962 0.952013 0035 0.036 0.9170.900 0.901 0893 0.885 0.877 0.870 0362 0.855 0.847 0.840 033 0026 0.820 0.813 O.NO 500 2 0.925 0907 0.890 0.873 0.8570.8420.826 0.812 0.797 0.7830.769 0.756 0.743 0.731 0.7180.706 0.094 0.68 0.672 0.661 0.650 0.640 3 589 0.864 0.840 0.816 0.794 0.772 0.750 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.56 0.551 0.537 0.524 0_512 4 08550823 0.792 0.763 0.735 0.708 0.6830.659 0.636 0.613 0.5920 5720.352 0.534 0.516 0.299 0.482 0.467 0.451 0.437 0.423 0.410 $ OR22 0.784 0.747 0.713 0681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.4020386 0370 0.355 0.341 0.328 0.790 0.746 0.705 0.666 0.69 0.596 0.564 0.335 0.507 0,480 0.456 0.432 0.410 0,390 0.370 0.352 0.335 0.319 0.303 0.289 0.275 0.262 7 0.760 0.711 0665 0.623 0.583 0547 0.513 0.482 0,452 0.42 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0.249 0.23 0.222 0.210 8 0.731 0.677 0.627 0.382 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.303 0.283 0.266 0.2490 233 0.21 0.204 0.191 0.179 0.168 9 0.70 0.645 0.592 0.544 0.500 0.250 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.18 0.167 0.155 0.144 0.14 TO 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 650 0.58 0.527 0.475 0.4290388 0.350.0.317 0.287 0.261 0.237 0.215 0.19 0.178 0.162 0.148 0.13 0.123 0.112 0.1030.094 0.086 12 0.625 0.57 0.497 0.444 0.397 0.356 0319 0.286 0.2570.231 0.208 0.1870.168 0.152 0.1370.124 0.112 0.102 0.092 0.083 0.076 0.069 13 0.601 0530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0093 0.084 0.075 0.068 0.061 0.055 14 0.577 0.505 0.442 0.3880340 0.299 0.263 0.232 0.205 0.18 0.160.0.141 0.125 0.11 0.099 0.088 0.078 0.069 0.062. 0.055 0.049 0.044 15 SSS 0.481 0.417 0.362 0.31 0.2750 239 0.209 0.183 0.1600.140 0.123 0.108 0.095 0,0840.074 0.065 0,057 0.051 0.045 0.040 0.035 16 0.534 0.4580394 0.3390292 0.252 0218 0.188 0.163 0.14 0.123 0.1070.093 0.081 0.071 0.062 0.054 0.047 0.042 0.0360032 0.028 17 0 513 0.436 0.371 0.317 0.270 0.231 0.19 0.1700.146 0.125 0.100.093 0.080 0,069 0.060 0,052 0.045 0.039 0.034 0.030 0.026 0.023 18 0.494 0.416 0.350 0.296 0.250 0212 0.10 0.153 0.130 0.11 0.09 0.0 0.069 0.059 0.051 0.044 0.038 0.032 0.028 0.024 0.021 0.018 19 0.475 0.3960.331 0.277 0.232 0.1940.166 0.138 0.116 0.098 0.003 0.00 0.00 0.051 0.043 0.037 0.031 0.027 0.023 0.0200.017 0.014 20 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.1240.104 0.087 0.073 0.06 0.051 0.043 0,037 0.031 0.026 0.002 0.019 0.016 0.014 0.012 21 0.439 0.359 0.294 0,242 0.1990.1640.135.0.112 0,093 0,077 0.064 0.053 0.044 0,037 0,031 0.026 0,02 0,015 0,015 0,013 0011 0.00% 22 0.422 0342 0.278 0.226 0.1840.150 0.123 0.101 0,083 0.068 0.056 0.046 0.035 0.032 0.026 0,022 0.01% 0,015 0,013 0.011 0009 0.007 23 0.4060.326 0.262 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.049 0.010 0.033 0.027 0.022 0.018 DOIS 0.012 0.000 0.00 0.007 0.006 24 0390 0310 0.247 0.197 0.158 0.126 0.102 0082 0.066 0.053 0.013 0.035 0.025 0.023 0.019 0,015 00013 0010 0.008 0.007 0.006 0005 25 0175 0.295 0233 0.184 0.146 0.116 0.092 0.074 0.0590.0470018 0.030 0.0024 0.0200.0160.0130010 0.00 0.007 0.006 0.005 0.004 26 0361 0.281.0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.0420.023 0.026 0.021 0.0172 0.014 0.0110.0090.00 0.006 0.005 0.0040.003 27 0.347 0.268 0.207 0.161 0.125 0.098 0.076 0.060 0.047 0.037 0.0290.023 0.018 0.014 0.0110.009 0.007 0.006 0.005 0.0040.003 0.002 28 0.333 0.355 0.19 0.150 0.116 0.090 0.069 0.054 0.042 0.033 0.026 0.0200.016 0,012 0,010 0.008 0.006 0.005 0.004 0.003 0.002 0.003 29 0321 0243 0.185 0.141 0.1070022 0.063 0.048 0.037 0.029 0,022 0.017 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 30 0306 0231 0.174 0.13 0.099 0.075 0,057 0.014 0.033 0.026 0.020 0,015 0,012 0.009 0.007 0.005 00004 0.003 0.003 0.002 0.002 0.001 40 0_208 0.142 0.097 0.067 0.046 0.032 0.022 0.01 0.01 0.008 0.005 0,004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 EXHIBIT 140-2 Present Value of an Annulty of S1 in Arrears, - # ] ((1+ Periods 1 2 3 4 5 0 7 $ 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 40 49 $% 7% 8% 99% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.962 0.952 0913 0935 0936 0.917 0909 0.901 0.89 0.885 0.877 0.870 0.862 0.859 084708400833 0.8260.8.2008130306 0.800 1.886 1899 1.833 1808 1.783 1.759 1.736 1.713 1.690 1668 1647 1.626 1.605 1.585 1.566 547 1.528 1.509 1.492 1.474 1.457 1400 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2322 2283 2246 2.210 2.174 2.140 2.106 2.074 2.042 2.011 1.981 1.952 3.630 3546 3.465 3.387 3.312 3.240 3.170 3,102 3.037 2974 2914 2.855 2.798 2.743 2.690 2.639 2589 2540 2.194 2.448 2.404 2.362 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.05 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.9262.864 2.803 2.745 2.699 5.2425.076 49174.7674,623 4.4864.355 4231 4.111 3.9983.889 3.784 3.685 3.589 3.498 3.410 3326 3.245 3.167 3.092 3.0202.951 6.002 5.786 5.582 5.389 5.206 5.033 4.888 4.712 4.564 4.423 4.288 4.160 4.039 3.9223.812 3.706 3.605 3.508 3.416 3.327 3.242 3.161 6.733 6.463 6210 5.971 5.7475.535 5.335 5.146 4.968 4.799 4.6394.487 43444.207 4.078 3.95438373.726 3.619 3.518 3.421 3.329 7.4357.108 6.802 6.515 6.2475.9955.7595 5375.328 5.1.32 4.9464.772 4.607 4.451 4.3034.163 4.031 3.905 3.786 3.673 3.566 3463 8.111 7.722 7.360 7.024 6.710 6.418 6145 5889 5650 5.426 5216 5.019 4.833 4.659 4.494 4339 4.192 4.0543.923 3.799 3.682 3.571 8.760 8 306 7.887 7.499 7.139 6,809 6.495 6.207 5.938 5,687 5453 5.234 5.029 4836 4,656 4.486 4327 4.177 4,035 3.902 3.776 3.656 9.385 8863 384 7943 7.536 7.161 6814 6.492 6.1945.918 5.660 5.421 5.197 498 4793 4611 4.439 4.278 4.127 3.985 3.851 3.725 9.986 9 3948853 8.3587.947.487 7.100 6.750 6.424 6.122 5.8425.383 342 5.1184.910 4,715 433343624.203 4.083 39123.780 10.563 9.899 9.295 8.745 8.2447.786 7.567 6.982 6.628 6,302 6.002 5.724 468 5.229 5.00% 4,802 461 4.432 42654.108 3.962 3.524 11.118 10 380 9.712 9.108 8.559 8,061 7.606 7.191 6,811 6,462 6.142 5.847 3.575 5.324 5.092 4.876 4675 4.489 4.315 4.153 4001 3.859 11.652 10.838 10.106 9447 8.15 8.313 7.8347379 6974 6,604 6.265 5.954 5.668 5.405 5.162 4938 4.730 4.536 4.357 4.189 4.033 3.387 12.166 11.274 10.4779.763 9.122 8.5448.002 7549 7.120 6.729 6,373 6047 5.749 5.475 3.222 4.990 4.775 4.576 4.391 4.219 4.089 3.910 12.659 11.670 10828 10,0599,372 8.7568.201 7.702 7.250 6.840 6.467 6.128 588 3.534 5.273 5.033 4812 4.608 4.419 4.243 4.0803928 13.139 12.085 01.158 10.336 9.604 8950 8.365 7.839 73666.938 6.550 6.198 5.8775.584 5.316 5.070 4843 4.635 4.442 4.263 4.097 3.942 13.590 12.462 11.470 10.5949.818 9.129 8.514 7.963 7.469 7025 6.623 6.259 5.929 5.628 5.353 5.101 4870 4657 4.460 4.279 4.110 3.954 14.029 12.821 11.764 10.836 10.017 9.292 8.649 8.075 7.562 7.102 6.687 6312 5.973 5.665 5.384 5.127 4.891 4.675 476 4.292 4.121 3.963 14.451 13.163 12.042 11.06.10.2019.442 8.7728.176 76457.170 6.7436.3596.0115696 54105.149 4.909 46904.488 4.302 4.130 3.970 14.857 13.489 12 303 11.272 10.371 9.5808.8838.266 7.7187.230 6.792 6.399 6.04 5.723 5.432 5.1674.925 -4.703 4.499 4.311 4.1373.976 115.247 13.799 12.550 11.469 10.529 9.707 8.985 8348 7,7847.283 6.835 6.434 6.0735.786 5:451 5.182 4937 4.713 4.507 4.318 4.143 3.981 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873 6.46+ 6,097 5.766 5.467 5.195 4.948 4.721 4.514 4.323 4.147 3.985 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8.458 7.896 7.372 6.906 6491 6118 5.783 5.480 5.206 4956 4.728 4.520 4.328 4.151 3988 16330 14.643 13.211 11.987 10.935 10.027 9.2178.548 7.943 7.409 6935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4.332 4.154 3.990 36.663 14.898 13.406 12.137 11.051 10.116 9.307 8 602 7.984 7.441 6.961 6 534 6.152 5.810 5.502 5.223 4970 4.739 4.528 4.335 4.157 3.992 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7470 6983 6.551 6.166 5.820 5.510 5.229 4975 4.743.531 4.337 4.159 3.994 17.292 13.372 13.765 12.409 11.258 10.274 9.427 8.694 ROSS 7.496 7.003 6.566 6.177 5.8295.517 5.235 4979 4.746 4.534 4.339 4.160 3.995 19.793 17.159 15.046 13.332 11.925 10,759 9.779 8951 R 244 7.634 7.105 6.642 6233 5.8715.548 3.298 4997 4.760 4.544 4.347 4.166 3.999
