Pharoah Manufacturers is considering investing in a new truck that will be used to deliver its custom-made furniture. David Shop, Controller of Pharoah Manufacturers, is considering a truck which will cost $72000 and which has a useful life of 5 years. The new truck will save $8640 per year in operating costs which are realized at the end of each year. David believes if the new truck is purchased it could be sold for $58050 at the end of its useful life. Pharoahs required rate of return is 8%.

Type of cash flow Periods Interest rate Factor

PV of $1 5 8% 0.6806

FV of $1 5 8% 1.4693

PV ordinary annuity 5 8% 3.9927

FV ordinary annuity 5 8% 5.8666

PV annuity due 5 8% 4.3121

What is the new trucks net present value? (round to the nearest dollar)

$17248

$2006

$-8608

$-7018