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

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Cullumber Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current truck (not the least of which is that it runs). The new truck would cost $57,000. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $7.500. At the end of 8 years. the company will sell the truck for an estimated \$28,300. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it hs a payback period that is less than 50% of the asset's estimated useful life. Larry Newton, a new manager. has suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The company's cost of capital is 8%. Click here to view the factor table. (a) Compute the cash payback period and net present value of the proposed investment, (if the net present waltie is negative, une either o negotive sign preceding the number es 45 or parentheses es (45). Round answer for present volue to 0 decimal places, es. 125. Round answer for Payback period to 1 decimal place. e.s. 10.5. For calculation purposes, use 5 decimal places as dispiayed in the foctor table provided.) Casti payback period Net present value (b) Does the project mert the compaw/s cash payback criteria? ploces, e.3. 125, Round answer for Payback period to 1 decimal place, e.g. 10.5. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Cashpayback period years Net present value (b) Does the project meet the company's cash payback criteria? Does it meet the net present value criteria for acceptance? eTextbook and Media

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