calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value Should the tow truck be purchased? be purchased The tow truck Calculate the net present value, incorporating the additional benefits suggested by Rick. (IF the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45). Round answer to 0 decimal places, e.g 25. For calculation purposes, uso 5 docimal places as displayed in tho factor tablo providod) Net present value Should the tow truck be purchased? be purchased. The tow truck Supposo Rick has bean ovarly optimistic in his asseasmant of tha value of the additional banafits. At a minimum, how much would the additional benofits have to be worth in ordar for the project to ba acceptad? (Round answer to 0 decimal places, o.g. 125.) Present value of the intangible benefits ane's Auto Care is considering the purchase of a new toww truck. The garage doesn't currently have a tow truck, and the $60,040 price tag for a new truck would ropresent a major expenditure. Jane Austen, owner of the garage, has compiled the estimates showin below in trying to determine whether the towr truck should be purchased Initial cost Estimated ueful life $60,040 8 years $7,970 $5,970 $12,000 Net annual cash flows from towing Overhaul costs (end of year 4) Salvage value ane's good friend, Rick Ryan, stopped by,. He is trying to convince Jane that the tow truck will have other benefits that Jene hasn't even considered. First, he says, cars that need towing need to be fixed. Thus, wwhen Jane tows them to her facility, her repair revenue:s will increase. Second, he notes that the tow truck could have a plow mounted on it, thus saving Jane the cost of plowing her parking lot. (Rick will give her a used plov blade for free if Jane will plow Rick's driveway.) Third, he notes that the truck will generate goodwill; people who are rescued by Jane's tow truck will feel grateful and might be more incined to use her ervice station in the future or buy gas there. Fourth, the to truck wil have Jane's Auto Care on its doors, hood, and back tailgate form of free advertising wherever the tow truck goas. Rick estimates that, at a minimum, these banafits would bo worth the following. Additional annual net cash Flows from repair work $3,010 760 960 750 Annual savings from plowing Additional annual net cash flows from customer "goodwill Additional annual net cash flows resulting from free advertising The company's cost of capital is 9% Calculate the nat present value, the additional benefits describad by Rick. (If the net present value is negative, use cither a negative sign preceding the number eg -45 or parentheses eg (45). Round ansiver to O decimal places, e.g. 125. For places as displayed in the factor table provided.)
