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Net present value method for a service company Coast - to - Coast Inc. is considering the purchase of an additional delivery vehicle for $
Net present value method for a service company
CoasttoCoast Inc. is considering the purchase of an additional delivery vehicle for $ on January The truck is expected to have a year life with an expected
residual value of $ at the end of years. The expected additional revenues from the added delivery capacity are anticipated to be $ per year for each of the next
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
Annual Net Cash Flow
b Compute 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 isNet present value method for a service company
CoasttoCoast Inc. is considering the purchase of an additional delivery vehicle for $ on January Y The truck is expected to have a year life with an expected residual value of $ at the end of years. The expected additional revenues from the added delivery capacity are anticipated to be $ per year for each of the next 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
Year 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 Compute 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.
Line Item Description Amount
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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