Sheffields Auto Care is considering the purchase of a new tow truck. The garage doesnt currently have a tow truck, and the $60,010 price tag for a new truck would represent a major expenditure. Sheffield Austen, owner of the garage, has compiled the estimates shown below in trying to determine whether the tow truck should be purchased.

Initial cost		$60,010
Estimated useful life		8 years
Net annual cash flows from towing		$7,970
Overhaul costs (end of year 4)		$6,000
Salvage value		$12,010

Sheffields good friend, Rick Ryan, stopped by. He is trying to convince Sheffield that the tow truck will have other benefits that Sheffield hasnt even considered. First, he says, cars that need towing need to be fixed. Thus, when Sheffield tows them to her facility, her repair revenues will increase. Second, he notes that the tow truck could have a plow mounted on it, thus saving Sheffield the cost of plowing her parking lot. (Rick will give her a used plow blade for free if Sheffield will plow Rick's driveway.) Third, he notes that the truck will generate goodwill; people who are rescued by Sheffields tow truck will feel grateful and might be more inclined to use her service station in the future or buy gas there. Fourth, the tow truck will have Sheffields Auto Care on its doors, hood, and back tailgatea form of free advertising wherever the tow truck goes. Rick estimates that, at a minimum, these benefits would be worth the following.

Additional annual net cash flows from repair work		$3,000
Annual savings from plowing		760
Additional annual net cash flows from customer goodwill		950
Additional annual net cash flows resulting from free advertising		750

The companys cost of capital is 9%.

(a) Calculate the net present value, ignoring the additional benefits described by Rick.

(b) Calculate the net present value, incorporating the additional benefits suggested by Rick.

(c) Suppose Rick has been overly optimistic in his assessment of the value of the additional benefits. At a minimum, how much would the additional benefits have to be worth in order for the project to be accepted?