The Scampini Supplies Company recently purchased a new delivery truck. The new truck has an after-tax cost of $21,500, and it is expected to generate after-tax cash flows of $6,000 per year. The truck has a 5-year expected life. The expected year-end abandonment values (after-tax salvage values) for the truck are given below. The company's WACC is 11%. $ -Select- E Year 0 1 23 & 4 LO 5 Annual After-Tax Cash Flow ($21,500) 6,000 6,000 6,000 6,000 6,000 After-Tax Abandonment Value $17,500 15,000 13,000 7,000 0 a. What is the truck's optimal economic life? Round your answer to the nearest whole number. year(s) b. Would the introduction of abandonment values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?

The Scampini Supplies Company recently purchased a new delivery truck. The new truck has an after-tax cost of $21,500, and it is expected to generate after-tax cash fows of \$6,000 per yeat The truck has a 5 -year expected ife. The expected year-end abandonment values (after-tax salvage values) for the truck are glven below. The company/s wace is 11%. 0. What is the trucks optimal economic life? Round your answer to the nearest whole number. year(s) b. Would the introduction of abandonment values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project