{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-09-14T00:05:02-04:00", "answer_date": "2024-09-14 00:05:02", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "10720310", "url": "\/study-help\/questions\/bilboa-freightlines-sa-of-panama-has-a-small-truck-that-10720310", "question_creation_date_js": "2024-09-14T00:05:02-04:00", "question_creation_date": "Sep 14, 2024 12:05 AM", "meta_title": "[Solved] Bilboa Freightlines, S.A. of Panama has a | SolutionInn", "meta_description": "Answer of - Bilboa Freightlines, S.A. of Panama has a small truck that it uses for local deliveries. The truck is in bad repair an | SolutionInn", "meta_keywords": "bilboa,freightlines,s,panama,small,truck,local,deliveries,bad,repair,overhauled,replaced", "question_title_h1": "Bilboa Freightlines, S.A. of Panama has a small truck that it uses for local deliveries. The truck is in bad repair and must be either", "question_title": "Bilboa Freightlines, S.A. of Panama has a small truck that it uses", "question_title_for_js_snippet": "Bilboa Freightlines, S A of Panama has a small truck that it uses for local deliveries The truck is in bad repair and must be either overhauled or replaced with a new truck The company has assembled the following information (Panama uses the U S dollar as its currency) Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value now Salvage value eight years from now Present New Truck Truck $ 37,000 $50,500 22,000 8,500 13,000 8,500 13,500 2,600 5,600 If the company keeps and overhauls its present delivery truck, then the truck will be usable for eight more years If a new truck is purchased, it will be used for eight years, after which it will be traded in on another truck The new truck would be diesel fuelled, 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 16 discount rate Click here to view Exhibit 10 1 and Exhibit 10 2, to determine the appropriate discount factor(s) using tables Required 1 a Determine the present value of net cash flows using the total cost approach (Negative amounts should be indicated with a minus sign Round discount factor(s) to 3 decimal place ) Present Value of Net Cash Flows Purchase the new truck Keep the old truck 1 b Should Bilboa Freightlines keep the old truck or purchase the new one O Purchase the new truck Keep the old truck 2 Using the incremental cost approach, determine the net present value in favor of (or against) purchasing the new truck (Negative amounts should be indicated with a minus sign Round discount factor(s) to 3 decimal place ) Net present value", "question_description": "

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\"image<\/p> Bilboa Freightlines, S.A. of Panama has a small truck that it uses for local deliveries. The truck is in bad repair and must be either overhauled or replaced with a new truck. The company has assembled the following information (Panama uses the U.S. dollar as its currency): Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value now Salvage value eight years from now Present New Truck Truck $ 37,000 $50,500 22,000 8,500 13,000 8,500 13,500 2,600 5,600 If the company keeps and overhauls its present delivery truck, then the truck will be usable for eight more years. If a new truck is purchased, it will be used for eight years, after which it will be traded in on another truck. The new truck would be diesel-fuelled, 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 16% discount rate. Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Required: 1-a. Determine the present value of net cash flows using the total-cost approach. (Negative amounts should be indicated with a minus sign. Round discount factor(s) to 3 decimal place.) Present Value of Net Cash Flows Purchase the new truck Keep the old truck 1-b. Should Bilboa Freightlines keep the old truck or purchase the new one? O Purchase the new truck Keep the old truck 2. Using the incremental-cost approach, determine the net present value in favor of (or against) purchasing the new truck? (Negative amounts should be indicated with a minus sign. Round discount factor(s) to 3 decimal place.) Net present value", "transcribed_text": "", "related_book": { "title": "Accounting", "isbn": "130898414, 9780132997379, 978-0130898418, 132997371, 978-0132569309", "edition": "9th Edition", "authors": "Charles T. Horngren, Walter T. Harrison Jr., M. Suzanne Oliv", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/83.jpg", "uri": "\/textbooks\/accounting-9th-edition-83", "see_more_uri": "" }, "free_related_book": { "isbn": "", "uri": "", "name": "", "edition": "" }, "question_posted": "2024-09-14 00:05:02", "see_more_questions_link": "\/study-help\/questions\/business-economics-2023-September-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/study-help\/industrial-organizational-psychology-understanding-the-workplace\/what-motivates-nonreligious-people-to-be-humble-2008518", "description": "=+ What motivates nonreligious people to be humble?", "stars": 0 }, { "url": "\/beaver-brothers-inc-is-conducting-a-study-to-assess-the", "description": "Beaver Brothers, Inc. is conducting a study to assess the capability of its 150-gram bar soap production line. A critical quality measure is the weight of the soap bars after stamping. 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