Question
(Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Moab, UT. The expansion requires the expenditure of $11,000,000
(Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Moab, UT. The expansion requires the expenditure of $11,000,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $3,000,000 per year for each of the next 7 years. In year 7 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at $0.8 million. Thus, in year 7 the investment cash inflow totals $3,800,000. Calculate the project's NPV using a discount rate of 10 percent.
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