(Ignore income taxes in this problem.) Your Company has a truck that needs a new engine that would cost $35,000. This will extend the useful life of the truck by 5 years. As an alternative, Your...


(Ignore income taxes in this problem.) Your Company has a truck that needs a new engine that would cost $35,000. This will extend the useful life of the truck by 5 years. As an alternative, Your Company could buy a brand new truck for $120,000. The new truck would also last 5 years. The annual operating expenses of the old truck are $8,500. The annual operating expenses of the new truck will only be $5,000. The old truck has a salvage value of $12,000 now and $3,500 in 5 years. The new truck is expected to have a $10,000 salvage value in 5 years. Your Company discount rate is 6%. What is the net present value of the decision to buy the new truck instead of repairing the old truck?    Enter your answer without dollar signs.  If the NPV is negative enter with a minus sign in front.



Jun 04, 2022
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