Question

You are working for a shipping company and consider buying a new truck. The price of the truck is EUR 44,000. Maintenance cost are EUR 739 per year. Annual Fuel cost are estimated to be EUR 1,532 and the insurance premium for the truck will be EUR 134 per year. The truck is going to be used for the next 5 years. You are unsure about the revenue prospects and have identified two scenarios. Scenario t=1 t=2 t=3 t=4 t=5 Good 20,000 21,000 20,000 19,000 15,000 Bad 13,000 12,000 10,000 10,000 11,000 The chance for the good scenario to realize is 50%. What are the expected cash flows of the truck over the next 5 years?

Select one: a. 41595,14095,14095,12595,12095,10595 b. 44000,4595,6595,7595,6595,1595 c. 41595,4595,6595,7595,6595,1595 d. 44000,7595,8095,7595,7095,5095 e. 44000,14095,14095,12595,12095,10595

Answer 1

Answer is option (e)
Explanation is given in the attachment.