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Net Present Value Method for a Service Company AM Express Inc. is considering the purchase of an additional delivery vehicle for $ 3 2 ,
Net Present Value Method for a Service Company AM Express Inc. is considering the purchase of an additional delivery vehicle for $ on January Y The truck is expected to have a fiveyear life with an expected residual value of $ at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $ per year for each of the next five years. A driver will cost $ in Y with an expected annual salary increase of $ for each year thereafter. The annual operating costs for the truck are estimated to be $ per year. Present Value of $ at Compound Interest Year a Determine the expected annual net cash flows from the delivery truck investment for YY Annual Net Cash Flow Y $ fill in the blank Y $ fill in the blank Y $ fill in the blank Y $ fill in the blank Y $ fill in the blank b Calculate the net present value of the investment, assuming that the minimum desired rate of return is Use the table of the present value of $ presented above. When required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Present value of annual net cash flows $ fill in the blank Investment $ fill in the blank Net present value $ fill in the blank c Is the additional truck a good investment based on your analysis? because the net present value is
Net Present Value Method for a Service Company
AM Express Inc. is considering the purchase of an additional delivery vehicle for $ on January Y The truck is expected to have a fiveyear life with an expected residual value of $ at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $ per year for each of the next five years. A driver will cost $ in Y with an expected annual salary increase of $ for each year thereafter. The annual operating costs for the truck are estimated to be $ per year.
Present Value of $ at Compound Interest
Year
a Determine the expected annual net cash flows from the delivery truck investment for YY
Annual Net Cash Flow
Y $
fill in the blank
Y $
fill in the blank
Y $
fill in the blank
Y $
fill in the blank
Y $
fill in the blank
b Calculate the net present value of the investment, assuming that the minimum desired rate of return is Use the table of the present value of $ presented above. When required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value.
Present value of annual net cash flows $
fill in the blank
Investment $
fill in the blank
Net present value $
fill in the blank
c Is the additional truck a good investment based on your analysis?
because the net present value is
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