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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
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 econorny, 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 $28,400. 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 newmanager, has 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 compary's cost of capital is 8%. Click here to view the factor table. (a) Compute the cash payback period and net present value of the proposed investment. (of the net present value is negative, use either a negative sign preceding the number es -45 or porentheses eg (45). Round answer for present value to 0 decimal places, eg. 125. Round answer for Paybock period to 1 decimal place, es. 10.5. For calculation purposes use 5 decimal places as displayed in the factor table provided.) Cash parback period years Net present value 5 (b) Does the project meet the comparr's cash payback criteria
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