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Gibson 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. Gibson Delivery recently acquired approximately $5.5 million of cash capital from its owners, and its president, George Hay, is trying to identify the most profitable way to invest these funds. 2.5 points 02:40 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 $630,000. 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 $290,000 per year. The additional vans are expected to have an average useful life of four years and a combined salvage value of $102,000. Operating the vans will require additional working capital of $49,000, which will be recovered at the end of the fourth year. eBook 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: References Year $170,000 Year 2 $310.000 Year $405,000 Year & $430,000 The large trucks are expected to cost $710,000 and to have a four year useful life and a $87,000 salvage value. In addition to the purchase price of the trucks, up-front training costs are expected to amount to $15,000. Gibson Delivery's management has established a 12 percent desired rate of return (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a&b. Determine the net present value and present value index for each investment alternative. (Enter answers in whole dollar, not in million. Negative amounts should be indicated by a minus sign. Round your intermediate calculations and final answers to 2 decimal places.) capital of $49,000, 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: 2.5 Year 1 $170,000 Year 2 $310,000 Year 3 $405.000 Year 4 $430,000 2 02:40:35 The large trucks are expected to cost $710,000 and to have a four year useful life and a $87,000 salvage value. In addition to the purchase price of the trucks, up front training costs are expected to amount to $15,000. Gibson Delivery's management has established a 12 percent desired rate of return (PV of $1 and PVA of $ 1) (Use appropriate factor(s) from the tables provided.) Required a.&b. Determine the net present value and present value index for each investment alternative. (Enter answers in whole dollar, not in million. Negative amounts should be indicated by a minus sign. Round your intermediate calculations and final answers to 2 decimal places.) a. Net Present Value (NPV) b. Prosent Value Index (PVI) TABLE 2 PRESENT VALUE OF AN ANNUITY OF $1 5% 8% 9% 10% 12% 14% 16% 20% 1 0.961538 0.952381 0.943396 0.934579 0.925926 0.917431 0.909091 0.892857 0.877193 0.862069 0.833333 2 1.886095 1.859410 1.833393 1.808018 1783265 1759111 1.735537 1690051 1.646661 1605232 1.527778 3 2.775091 2.723248 2673012 2.624316 2.577097 2.531295 2.486852 2401831 2.321632 2.245890 2.106481 4 3.629895 3.545951 3.465106 3.387211 3.312127 3.239720 3.169865 3.0373492.9137122798181 2.588735 5 4.451822 4.329477 4.212364 4.100197 3.992710 3.889651 3.790787 3.604776 3.433081 3274294 2.990612 6 5.242137 5.075692 4.917324 4766540 4.622880 4.485919 4.355261 4.111407 3.888668 3.684736 3.325510 7 6.002055 5.7863735.582381 5.389289 5.206370 5.032953 4.868419 4.563757 4.288305 4.038565 3.604592 8 6.732745 6.463213 6.209794 5.971299 5.7466395.5348195334926 4.967640 4.638864 4343591 3.837160 9 7435332 7107822 6.801692 6.515232 6.246888 5.995247 5.759024 5.328250 4.946372 4606544 4.030967 10 8.110896 7721735 7360087 7023582 6.710081 6.417658 6.144567 5.650223 5.216116 4.833227 4.192472 11 8.760477 8.306414 7886875 7498674 7138964 6.805191 6.495061 5.937699 5.452733 5.028644 4.327060 12 9.385074 8.863252 8383844 7942686 7536078 7160725 6.813692 6.194374 5.660292 5.197107 4.439217 13 9.985648 9.393573 8.8526838.357651 7.903776 7.486904 7103356 6.423548 5.842362 5.342334 4.532681 14 10.563123 9.898641 9.294984 8.745468 8.244237 7786150 7.366687 6.628168 6.002072 5.467529 4610567 1511118387 10.379658 9.712249 9.107914 8.559479 8060688 7.606080 6.810864 6142168 5.575456 4.675473 16 11.652296 10.837770 10.105895 9.446649 8.851369 8.312558 7823709 6.973986 6.265060 5.668497 4729561 17 12.165669 11274066 10.477260 97632239121638 8.543631 8.021553 7119630 6.372859 5.748704 4774634 18 12.659297 11689587 10.827603 10.059087 9.371887 8755625 8.201412 7249670 6.467420 5.817848 4.812195 19 13.133939 12.085321 11158116 10.335595 9.6035998.905115 8.364920 73657776.550369 5.877455 4.843496 20 13.590326 2.462210 11.469921 10.594014 9.818147 9.128546 8,513564 7469444 6.623131 5.928841 4.869580 TABLE 1 PRESENT VALUE OF $1 n 4% 5% 6% 7% 8% 9% 10% 12% 14% 16% 20% 1 0.961538 0.952381 0.943396 0.934579 0.9259260.917431 0.909091 0.892857 0.877193 0.862069 0.833333 2 0.924556 0.907029 0.889996 0.873439 0.857339 0.841680 0.826446 0.797194 0.769468 0.743163 0.694444 3 0.888996 0.863838 0.839619 0.816298 0.793832 0772183 0751315 0.711780 0.674972 0.640658 0.578704 4 0.854804 0.822702 0.792094 0762895 0.735030 0.708425 0.683013 0.635518 0.592080 0.552291 0.482253 5 0.821927 0.783526 0.747258 0.712986 0.680583 0.649931 0.620921 0.567427 0.519369 0.476113 0.401878 6 0.790315 0.746215 0704961 0666342 0.630170 0.596267 0.564474 0.506631 0.455587 0.410442 0.334898 7 0759918 0.710681 0.665057 0622750 0.583490 0.547034 0.513158 0.452349 0.399637 0.353830 0.279082 8 0730690 0.676839 0627412 0.582009 0.540269 0.501866 0466507 0.403883 0.350559 0305025 0.232568 9 0702587 0.6446090.591898 0.543934 0.500249 0.460428 0.424098 0.360610 0,307508 0.262953 0.193807 10 0675564 0.613913 0.558395 0.508349 0.463193 0.422411 0.385543 0.321973 0.269744 0226684 0.161506 110.649581 0.584679 0.526788 0.475093 0.428883 0.387533 0.350494 0.287476 0236617 0.195417 0.134588 12 0.624597 0.556837 0.496969 0.444012 0.397114 0.355535 0.318631 0.256675 0.207559 0168453 0.112157 130600574 0.530321 0.468839 0.414964 0,367698 0.3261790289664 0.229174 0.182069 0.145227 0.093464 14 0.577475 0.505068 0.442301 0.387817 0.340461 0.2992460.263331 0.204620 0159710 0.125195 0.077887 15 0.555265 0.481017 0.417265 0.362446 0.315242 0.274538 0239392 0.182696 0.140096 0107927 0.064905 16 0.533908 0.458112 0.393646 0338735 0.291890 0.251870 0.2176290.163122 0122892 0093041 0054088 17 0.513373 0.436297 0371364 0.316574 0.270269 0231073 0.197845 0.145644 0.107800 .0R0207 0045073 18 0.493628 0.4155210350341 02958640250249 0211994 0179859 0.130040 0.094561 0069144 0.037561 19 0.474642 0.395734 0.330513 0.2765080.231712 0.194490 0163508 0.116107 0.082948 0.059607 0.001301 20 0.456387 0.376889 0.311805 0.2584190.214548 0.178431 0.148644 0.103667 0.072762 0051385 0026084