Multiple choice question:

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck. The truck's basic price is $54,000. The truck will be fully depreciated to 0 using straight line depreciation and it will be sold after three years for $16,000. Use of the truck will require an increase in net working capital (spare parts inventory) of $2,000. The truck will have no effect on revenues, but it is expected to save the firm $22,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 40 percent.

What is the initial investment outlay for the truck? (That is, what is the Year 0 net cash flow?) [ Answers for this question are: "-$56,000", "-$60,000", "-$62,000", or "-$65,000"]

What is the incremental operating cash flow in Year 1? [The answer choices for this question are: "$20,400", "$21,000", "$19,400", "$19,000", or "$19,920"]

What is the terminal (nonoperating) cash flow at the end of Year 3? [The answer choices for this question are: "$11,600", "$17,000", "$15,000", "$14,000", or "$15,680"]

The truck's required rate of return is 10 percent. What is its NPV? [The answer choices for this question are: "-$3,237", "-$1,480", "-$4", "$3,447", or "-$1,547"]