We-Deliver company is considering increasing its fleet by 15 new vans for a total cost of $3.0 million. They expect to keep the vans for 10 years and then sell them all for $300,000. To help them decide which type of van to buy they paid an intern $8,000 to compare alternatives and create a report. We-Deliver believes that these new vans will create incremental annual revenue of $35,000 per additional van. They expect that annual operating costs per vehicle will be $15,500. Working capital of $25,000 will be required which will be returned when the vehicles are salvaged. The company has a 35% tax bracket, the CCA rate equals 30% and the firm uses 10% as a cost of capital.

a) Based upon a NPV analysis should the company purchase the vehicles? Show all your work.

b) What you can you say about the IRR of the project? (no calculation is necessary).

Please use Formula. Don't use excel Thank you.