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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 $ 4 4 ,
Net Present Value Method for a Service Company AM Express Inc. is considering the purchase of an additional delivery vehicle for $ on January 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 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 a Determine the expected annual net cash flows from the delivery truck investment for YY Annual Net Cash Flow 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. c Is the additional truck a good investment based on your analysis? because the net present value is neqative
Net Present Value Method for a Service Company
AM Express Inc. is considering the purchase of an additional delivery vehicle for $ on January 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 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
a Determine the expected annual net cash flows from the delivery truck investment for YY
Annual Net Cash Flow
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.
c Is the additional truck a good investment based on your analysis?
because the net present value is neqative
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