Net Present Value

Metlock Auto Care is considering the purchase of a new tow truck. The garage currently has no tow truck, and the $60,010 price tag for a new truck would be a major expenditure for it. Barbara Brown, owner of the garage, has compiled the following estimates in trying to determine whether she should purchase the tow truck: Barbara's good friend, Michael Davis, stopped by. He is trying to convince Barbara that the tow truck will have other benefits that Barbara has not even considered. First, he says, cars that need towing need to be fixed. Thus, when Barbara tows them to her facility. her repair revenues will increase. Second, he notes that the tow truck could have a plow mounted on it, thus saving Barbara the cost of plowing her parking lot. (Michael will give her a used plow blade for free if Barbara will plow Michael's driveway) Third, he notes that the truck will generate goodwill; that is, people who are rescued by Barbara and her tow 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 "Metlock Auto Care" on its doors. hood, and back tailgate-a form of free advertising wherever the tow truck goes. Michael estimates that, at a minimum, these benefits would be worth the following: Calculate the net present value, ignoring the additional benefits described by Michael, (If the net present value is negative, use either a negative sign preceding the number e. -45 or parentheses es. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, eg. 1.25124 and final answer to 0 decimal places, eg. 5, 275.) Net present value Should Barbara purchase the tow truck