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Question 5 of 5 Question 5 of 5 Linkin Corporation is considering purchasing a new delivery truck The truck has many advantages over the company's
Question 5 of 5
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Question 5 of 5 Linkin Corporation is considering purchasing a new delivery truck The truck has many advantages over the company's current truck (not the least of which is that it runs). The new truck would cost $56,760. Because of the increased capacity. reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,600. At the end of 8 years. the company will sell the truck for an estimated 328.600, Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset's estimated useful life. Larry Newton. a new manager. hps suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The companVs cost of capital is 8K Click here to view PV table. Compute the cash payback period and net present value of the proposed investment. (If the przent vahz is use either a negative sign preceding the number -45 or (45). Rourdanswer to O decimal placz, eg '5 Ramd answer for period to 1 decirno' ple, e.g. IOS. For calculation purpses, use 5 decimal places as "splard in the factor table provided.) Cash payback period Net present value years Does the project meet the company's cash payback criteria?
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