Bock Net Present Value Method for a Service Company AM Express Inc. is considering the purchase of an additional delivery vehicle for $41,000 on January 1, 2011. The truck is expected to have a five-year life with an expected residual value of $5,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $70,000 per year for each of the next five years. A driver will cost $48,000 in 2012, with an expected annual salary increase of $4,000 for each year thereafter. The annual operating costs for the truck are estimated to be $2,000 per year Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.693 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 . 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 " 0.627 0.467 0.404 0.327 0.233 " 0.592 0.424 0.361 0.384 0.194 10 0.558 0.386 0.322 0.247 0.142 a. Determine the expected annual net cash flows from the delivery truck investment for 2011-2015 Annual Net Cash Flow 2011 2012 2013 2014 0000 Previous Next