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Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the companys current truck (not the least of which is

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Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the companys current truck (not the least of which is that it runs). The new truck would cost $56,280. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,400. At the end of 8 years, the company will sell the truck for an estimated $27,600. 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% 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 value is negative, use elther a negative stgn preceding the number eg 45 or parentheses eg (45). Round answer for present value to 0 decimol places, eg. 125. Round answer for Payback perlod to 1 decimal ploce, es. 10.5. For colculation purposes, use 5 decimal places as dispilayed in the factor toble provided) Cash payback perlod years Nat present value Compute the cash payback period and net present value of the proposed investment. (If the net present walue is negative, use elther a negattve sign preceding the number eg 45 or parentheses gg (45). Round answer for present value to 0 decimal ploces, eg. 125. Round answer for Payback perfod to 1 dedimal place, eg. 10.5. For calculation purposes, use 5 decimal ploces as dilsplayed in the foctor table provided.) Cash pryback period years Net present value 5 (b) Does the project meet the company's cash payback criteria? Does it meet the net present value criteria for acceptance? Does the project meet the company's cash payback criteria? Does it meet the net present value criteria for acceptance

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