The garden supply company is also considering taking out a loan and buying a small truck to save costs on deliveries. The truck costs $69000 and is expected to earn end of year after tax net cash inflows of $10000, $15000, $20000 and $20000 for the next four years before it wears out sufficiently to be unreliable and must be sold for an estimated $18000 (after tax).

a) Calculate the NPV of the truck if the interest rate on the loan is 5.9% pa.

b) Calculate the NPV of the truck if the interest rate on the loan is 10.5% pa.

c) Advise management of your recommendation regarding purchase of the truck based on your NPV calculations.

Please explain your answer .