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Arkansas Best Freightways is considering a purchase of three different potential trucks. it is considering three different investment scenarios and their respective cash flows. Arkansas
Arkansas Best Freightways is considering a purchase of three different potential trucks. it is considering three different investment scenarios and their respective cash flows. Arkansas Best Freightways use a cost of capital of 9 percent to evaluate the investments. Year Investment 1 Investment 2 Investment 3 Cost of Capital Year 0 (today) Buy new truck (85,000) (105,000) (125,000) 9 % Year 1 Increased profits 25,000 20,000 40,000 Year 2 Increased profits 25,000 30,000 30,000 Year 3 Increased profits 25,000 40,000 20,000 Year 4 Increased profits 25,000 50,000 10,000 Required: 1. Calculate the net cash flows (not discounted) over the life of the three investments (years 0 to 4). (Negative amounts should be entered using a minus sign.)
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