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Ivanhoe Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current truck ( not the least of which
Ivanhoe Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current trucknot the least of which is that it runs The new truck would cost $ Because of the increased capacity, reduced maintenancecosts, and increased fuel economy, the new truck is expected to generate cost savings of $ At the end of eight years, thecompany will sell the truck for an estimated $ Traditionally, the company has used a general rule that it should not accept aproposal unless it has a payback period that is less than of the asset's estimated useful life. Gary Smith, a new manager, hassuggested that the company should not rely only on the payback approach but should also use the net present value method whenevaluating new projects. The company's cost of capital is Calculate net present value and cash payback period. What is the payback period and net present value
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