Question

Net Present Value Methed for a Service Company AM Express Inc. is cansidering the purchase of an additional delivery vehicle for $55,000 on January 1, 20Y1. The truck is expected to have a five-year life with an expected residual value of $15,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $58,000 per year for each of the next five years. A driver will cost?42,000 in 20Y1, with an expected annual salary increase of $1,000 for each year thereafter. The annual operating costs for the truck are estimated to be $3,000 per year. Present Value of $1 at Compound Interest Year 6% 0.943 0.90 0.893 0.890 0.92 0.797 0.75 0.694 .840 0.751 0.712 0.7920.683 0.636 0.5720.482 0.747 0.621 0.567 .4970.402 0.705 0.564 0.507 0.665 0.513 0.452 0.376 0.279 0.6270.467 0.404 0.327 0.233 0.592 0.424 0.361 0.284 0.194 .558 0.38 0.322 .2470.162 10% 12% 15% 20% 0.870 0,833 0.7120.658 0.579 0.432 0.335 a. Determine the expected annual net cash flows from the delivery truck investment for 20Y1-20YS, Annual Net Cash Flow 20Y1 20Y2 20Y3 20Y4 20YS b. Calculate the net present value of the investment, assuming that the minimum desired rate of return is 12% indicate a negative net present value. Present value of annual net cash flows Investment If required, round to the nearest dollar. Use e table of the present value o $1 presented above. If required, use the minus sign to