1. Your company purchases a new heavy-duty truck. It has an initial cost of $50,000 and maintenance will be provided by the dealer at no additional charge for the first 3 years. At the end of year 4 maintenance cost is estimated to be $2,000 increasing at 10 percent per year thereafter for an additional 4 years. You estimate the additional revenues to the company due to the use of the new heavy-duty truck to be $8,000 end of years 1 and 2 increasing to $10,000 for end of years 3 and increasing by an additional $500 per year for end of years 4 through 8. At the end of 8 years the truck will be sold for its estimated value of $15,000. Interest rate for all 8 years is 15%.

1. Draw the cash flow diagram from the companys perspective.
2. What is the present value at time=0 for all your estimated maintenance expenses?
3. What is the present value at time=0 for all your estimated revenues including the sell of the truck at end of year 8?
4. Based on your findings for (a) and (b) above, was purchasing the heavy-duty truck profitable to the company?