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Pharoah Manufacturers is considering investing in a new truck that will be used to deliver its custom-made furniture, Kenneth Shop, Controller of Pharoah Manufacturers, is
Pharoah Manufacturers is considering investing in a new truck that will be used to deliver its custom-made furniture, Kenneth Shop, Controller of Pharoah Manufacturers, is considering a truck which will cost $89600 and which has a useful life of 5 years. The new truck will save $10752 per year in operating costs which are realized at the end of each year. Kenneth believes if the new truck is purchased it could be sold for $72240 at the end of its useful life. Pharoah's required rate of return is 10%. Periods Interest rate Factor 10% 0.6209 5 5 U1 10% 1.6105 Type of cash flow PV of $1 FV of $1 PV ordinary annuity FV ordinary annuity PV annuity due Un 5 10% 3.7908 5 10% 6.1051 5 UI 10% 4.1699 What is the new truck's net present value? (round to the nearest dollar) $-3987 O $20379 O $-108 O $-9627
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