Please Give the correct answers for Part a & b (excel sheet) and c with the explanation.

Thank you.

Problem 10-16A Using present value techniques to evaluate alternative investment opportunities Swift Delivery is a small company that transports business packages between New York and Chicago. It operates a fleet of small vans that moves packages to and from a central depot within each city and uses a common carrier to deliver the packages between the depots in the two cities. Swift Delivery recently acquired approximately $4 million of cash capital from its owners, and its president, George Hay, is trying to identify the most profitable way to invest these funds. Todd Payne, the company's operations manager, believes that the money should be used to expand the fleet of city vans at a cost of $900,000. He argues that more vans would enable the company to expand its services into new markets, thereby increasing the revenue base. More specifically, he expects cash inflows to increase by $325,000 per year. The additional vans are expected to have an average useful life of four years and a combined salvage value of $100,000. Operating the vans will require additional working capital of $50,000, which will be recovered at the end of the fourth year In contrast, Oscar Vance, the company's chief accountant, believes that the funds should be used to purchase large trucks to deliver the packages between the depots in the two cities. The conversion process would produce continuing improvement in operating savings and reduce cash outflows as follows. Year Year 2 Year 3 Year 4 $175,000 $375,000 $450,000 $500,000 The large trucks are expected to cost $1,000,000 and to have a four-year useful life and a $8i,250 salvage value. In addition to the purchase price of the trucks, up-front training costs are expected to amount to $20,000. Swift Delivery's management has established a 10 percent desired rate of return. Page 471 Required Round your computations to two decimal points a. Determine the net present value of the two investment alternatives. b. Calculate the present value index for each alternative c. Indicate which investment alternative you would recommend. Explain your choice Enable Editing PROTECTED VIEW Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. fox A1 Given Data P10-16A: A 1 Given Data P10-16A: D F J K L 2 3 SWIFT DELIVERY 4 $ 4,000,000 Cash capital acquired 5 6 7 Alternative 1: Cost of new vans 900,000 $ 9 Expected annual cash inflow increase 325,000 10 Useful life of new vans 4 11 100,000 50,000 Combined salvage value of new vans Additional working capital needed 12 $ 13 14 15 Reduction in cash outflow-year 1 Reduction in cash outflow-year 2 18 Alternative 2: $ 1,000,000 Cost of new trucks 16 $ 175,000 17 $ 375,000 Reduction in cash outflow-year 3 19 $ 450,000 Reduction in cash outflow-year 4 Useful life of new trucks $ 500,000 20 21 Salvage value of new trucks 2 81,250 20,000 $ Training costs required $ 3 24 Desired rate of return 10% 25 26 27 28 29 30 31 Given P10-16A SP10-16A Ready Tell me Page Layout View File Home Insert Draw Formulas Data Review Help :what you want to do Enable Editing PROTECTED VIEW Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. =ROUND(SUM(F10:F12)/-SUM (F15: F16),3) D34 A C F G 6 Net Present Value Calculations Alternative 1: Table Value Present Value Cash Inflows Amount 10 Annual Cash Inflows Salvage Value Working Capital Recovery 11 13 Total cash inflow 14 Cash outflows 15 Cost of Vans Working Capital Increase Net Present Value 16 Try again! Alternative 2: Cash Inflows: Amount Table Value Present Value Year 1 Year 2 Year 3 Year 4 Salvage Value Total cash inflow Cash Outflows Cost of Trucks Training Cost Net Present Value 30 31 Try again! 33 b. Present Value Indexes: #DIV/ 0! Alternative 1 34 #DIV/0! Alternative 2 35 #DIV/0! #DV/0! 36. SP10-16A Given P10-16A Ready Problem 10-16A Using present value techniques to evaluate alternative investment opportunities Swift Delivery is a small company that transports business packages between New York and Chicago. It operates a fleet of small vans that moves packages to and from a central depot within each city and uses a common carrier to deliver the packages between the depots in the two cities. Swift Delivery recently acquired approximately $4 million of cash capital from its owners, and its president, George Hay, is trying to identify the most profitable way to invest these funds. Todd Payne, the company's operations manager, believes that the money should be used to expand the fleet of city vans at a cost of $900,000. He argues that more vans would enable the company to expand its services into new markets, thereby increasing the revenue base. More specifically, he expects cash inflows to increase by $325,000 per year. The additional vans are expected to have an average useful life of four years and a combined salvage value of $100,000. Operating the vans will require additional working capital of $50,000, which will be recovered at the end of the fourth year In contrast, Oscar Vance, the company's chief accountant, believes that the funds should be used to purchase large trucks to deliver the packages between the depots in the two cities. The conversion process would produce continuing improvement in operating savings and reduce cash outflows as follows. Year Year 2 Year 3 Year 4 $175,000 $375,000 $450,000 $500,000 The large trucks are expected to cost $1,000,000 and to have a four-year useful life and a $8i,250 salvage value. In addition to the purchase price of the trucks, up-front training costs are expected to amount to $20,000. Swift Delivery's management has established a 10 percent desired rate of return. Page 471 Required Round your computations to two decimal points a. Determine the net present value of the two investment alternatives. b. Calculate the present value index for each alternative c. Indicate which investment alternative you would recommend. Explain your choice Enable Editing PROTECTED VIEW Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. fox A1 Given Data P10-16A: A 1 Given Data P10-16A: D F J K L 2 3 SWIFT DELIVERY 4 $ 4,000,000 Cash capital acquired 5 6 7 Alternative 1: Cost of new vans 900,000 $ 9 Expected annual cash inflow increase 325,000 10 Useful life of new vans 4 11 100,000 50,000 Combined salvage value of new vans Additional working capital needed 12 $ 13 14 15 Reduction in cash outflow-year 1 Reduction in cash outflow-year 2 18 Alternative 2: $ 1,000,000 Cost of new trucks 16 $ 175,000 17 $ 375,000 Reduction in cash outflow-year 3 19 $ 450,000 Reduction in cash outflow-year 4 Useful life of new trucks $ 500,000 20 21 Salvage value of new trucks 2 81,250 20,000 $ Training costs required $ 3 24 Desired rate of return 10% 25 26 27 28 29 30 31 Given P10-16A SP10-16A Ready Tell me Page Layout View File Home Insert Draw Formulas Data Review Help :what you want to do Enable Editing PROTECTED VIEW Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. =ROUND(SUM(F10:F12)/-SUM (F15: F16),3) D34 A C F G 6 Net Present Value Calculations Alternative 1: Table Value Present Value Cash Inflows Amount 10 Annual Cash Inflows Salvage Value Working Capital Recovery 11 13 Total cash inflow 14 Cash outflows 15 Cost of Vans Working Capital Increase Net Present Value 16 Try again! Alternative 2: Cash Inflows: Amount Table Value Present Value Year 1 Year 2 Year 3 Year 4 Salvage Value Total cash inflow Cash Outflows Cost of Trucks Training Cost Net Present Value 30 31 Try again! 33 b. Present Value Indexes: #DIV/ 0! Alternative 1 34 #DIV/0! Alternative 2 35 #DIV/0! #DV/0! 36. SP10-16A Given P10-16A Ready