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Burlington Motor Carriers, a trucking company, is considering the installation of a two - way mobile satellite messaging service on its 2 , 0 0

Burlington Motor Carriers, a trucking company, is considering the installation of a two-way mobile satellite messaging service on its 2,000 trucks. From tests done last year on 120 trucks, the company found that satellite messaging could cut 50% of its $7 million bill for long-distance communications with truck drivers. More importantly, the drivers who used this system reduced the number of "deadhead" miles - those driven without paying loads - by 0.6%. Applying that improvement to all 230 million miles covered by the Burlington fleet each year would produce an extra $1.25 million in savings.
Equipping all 2,000 trucks with the satellite hookup will require an investment of $12 million and the construction of a message-relaying system costing $1 million. The equipment and onboard devices will have a service life of eight years and negligible salvage value; they will be depreciated under the five-year MACRS class. Burlington's marginal tax rate is about 25%, and its required minimum attractive rate of return is 17%.
Click the icon to view the MACRS depreciation schedules.
Click the icon to view the interest factors for discrete compounding when i=17% per year.
(a) Determine the annual net cash flows from the project. Fill in the table below. (Round to four decimal places.)
\table[[Period,Annual Net Cash Flow],[0, million],[1,$2.6 million],[2,$4.16 million]]
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