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.)

2. Calculate the present value for each of the three possible investments over years 1 through 4, using the 9 percent cost of capital as the interest (or discount) rate. (Round your answer to 2 decimal places. Use the Excel NPV() function to calculate the present value for each of the three possible investments.)

3. Given the present value of each investment over years 1-4, and the initial cost to invest in a truck, which truck provides the greatest net present value overall?