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need answer for C) Jane's Auto Care is considering the purchase of a new tow truck. The garage doesn't currently have a tow truck, and
need answer for C)
Jane's Auto Care is considering the purchase of a new tow truck. The garage doesn't currently have a tow truck, and the $59,960 price tag for a new truck wauld represent a majar expenditure. Jane Austen, awner of the garage, has compiled the estimates shown below in trying to determine whether the tow truck shauld be purchased. Jane's gaod friend, Rick Ryan, stopped by. He is trying to corwince Jane that the tow truck will have ather benefits that Jane hasn't even considered. First, he says, cars that need towing need to be fixed. Thus, when Jane tows them to her facility, her repair revenues will increase. Second, he nates that the taw truck could have a plaw mounted on it, thus saving Jane the cost of plawing her parking Iot. IRick will give her a used plow blade far free if Jane will plow Rick's driveway) Third, he notes that the truck will generate gaodwill: people wha are rescued by Jane's taw truck will feel grateful and might be more inclined to use her service station in the future or buy gas there. Fourth, the tow truck will have "Jane's Auto Care" on its doors, hood, and back tailgate-a form of free advertising wherever the tow truck goes. Rick estimates that, at a minimum, these benefits wauld be worth the following. The compary's cost of capital is 9%. Click here to view the factor table. (a) Your answer is correct. Calculate the net present value, ignoring the additional benefits described by Rick. If the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45). Round answer to 0 decimai ploces, eg. 125. For calcuiation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value $ Should the tow truck be purchased? The tow truck be purchased. eTextbook and Media Attempts: 2 of 3 used (b) Your answer is correct. Calculate the net present value, incorporating the additional benefits suggested by Rick. (ff the net present value is negative, use either a negotive sign preceding the number eg. 45 ar parentheses eg. (45). Round arswer to 0 decimal places, eg. 125. Far calculation purposes, use 5 decimal piaces as displayed in the factor table provided.) Net present value $ Should the tow truck be purchased? The tow truck be purchased. eTextbook and Media Attempts: 1 of 3 used (c) Suppose Rick has been averly optimistic in his assessment of the value of the additional benefits. At a minimum, how much would the additional benefits have to be worth in order for the project to be accepted? (Round answer to 0 decimai ploces, eg. 125.) Present value of the intangible benefits \$Step by Step Solution
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