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Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current (not the least of which is that it

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Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current (not the least of which is that it runs). The new truck would cost $55,728. Because of the increased capacity, reduced enance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,100. At the end of eight the company will sell the truck for an estimated $27,500. Traditionally, the company has used a general rule that it should not t a proposal unless it has a payback period that is less than 50% of the asset's estimated useful life. Donald Robinson, a new ger, has suggested that the company should not rely only on the payback approach but should also use the net present value od when evaluating new projects. The company's cost of capital is 8%

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