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I was wondering what i did wrong here. If anyone can help me out please and thank you. Palo Alto Corporation is considering purchasing a
I was wondering what i did wrong here. If anyone can help me out please and thank you.
Palo Alto 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 dollar 57,200. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of dollar 7,490. At the end of 8 years the company will sell the truck for an estimated dollar 28,400. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50 percentage 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 percentage. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Compute the cash payback period and net present value of the proposed investment. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125. Round answer for Payback period to 1 decimal place, e.g. 10.5.) Cash payback period year Net present valueStep by Step Solution
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