Fylingdales Fabrication is considering investing in a new delivery vehicle which will make savings over the current out-sourced service. The cost of the vehicle is $35000 and it will have a five-year life. The savings it will make over the period are:

Cash Flow:

Year $

1 8,000

2 9,000

3 12,000

4 9,500

5 9,000

The firm currently has a return of 12% and this is considered to be its cost capital.

Calcultae the NPV of the investment.

On the basis of the NPV you have calculated, recommend whether or not the investment should go ahead.