You have been asked by the president of your company to evaluate the proposed acquisition of a new special$-$purpose truck. The truck's basic price is $$60,000.$ The truck will be fully depreciated to $0$ using straight line depreciation and it will be sold after three years for $$20,000.$ Use of the truck will require an increase in net working capital $($spare parts inventory$)$ of $$2,000.$ The truck will have no effect on revenues, but it is expected to save the firm $$19,000$ per year in before$-$tax operating costs, mainly labor. The firm's marginal tax rate is $40$ percent.

What is the initial investment outlay for the truck? $($That is$,$ what is the Year $0$ net cash flow?$)$

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What is the incremental operating cash flow in Year $1?$

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What is the terminal $($nonoperating$)$ cash flow at the end of Year $3?$

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The truck's required rate of return is $10$ percent. What is its NPV$?$

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