Ans:
Year | |||||||
0 | 1 | 2 | 3 | 4 | 5 | ||
1 | Keep the old truck | ||||||
Overhaul needed now | -23000 | ||||||
Annual operating costs | -22000 | -22000 | -22000 | -22000 | -22000 | ||
Salvage value (old)(after 5 years) | 20000 | ||||||
Total cash flows | -23000 | -22000 | -22000 | -22000 | -22000 | -2000 | |
Discount factor (i=7%) | 1 | 0.935 | 0.873 | 0.816 | 0.763 | 0.713 | |
Present Value | -23000 | -20570 | -19206 | -17952 | -16786 | -1426 | |
Net present value | -98940 | ||||||
2 | Purchase the new truck | ||||||
Purchase new truck | -36000 | ||||||
Salvage value (old)(before 5 Years) | 5000 | ||||||
Annual operating costs | -19500 | -19500 | -19500 | -19500 | -19500 | ||
Salvage value (new) | 12000 | ||||||
Total cash flows | -36000 | -19500 | -19500 | -19500 | -19500 | -2500 | |
Discount factor (i=7%) | 1 | 0.935 | 0.873 | 0.816 | 0.763 | 0.713 | |
Present Value | -36000 | -18233 | -17024 | -15912 | -14879 | -1782.5 | |
Net present value | -103829 | ||||||
3. Bilboa should keep the old truck since its net present value is higher than the net present value . | |||||||
of purchasing the new truck. |
Check my work Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for...
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: New Truck $ 30,000...
Check my work 3 Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Present Nev Truck points Truck s 24,000$ 27,000 $ 8,000 $ 7,000 s 11,000 6000 Purchase cost new Remaining book value Overhaul needed now Annual cash operating costa Salvage value-now Salvage value-five years from now eBook $ 2,000...
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Present Truck New Truck Purchase cost new $ 30,000 $ 39,000 Remaining book value $ 17,000 - Overhaul needed now $ 16,000 - Annual cash operating costs $ 15,500 $ 14,000 Salvage value-now $ 9,000 - Salvage value-five years from now $...
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: New Truck $ 30,000 Purchase cost (new) Remaining book value Overhaul needed now Annual cash operating costs Salvage value-now Salvage value-five years from now Present Truck $ 21,000 $ 11,500 $ 7,000 $ 10,000 $ 9,000 $ 1,000 $ 6,500 $ 4,000...
Bilboa Freightlines. S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: New Truck $ 49,000 Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value-now Salvage value-five years from now Present Truck $ 36,000 $ 24,000 $ 23,000 $ 18,000 $ 13,000 $ 10,000 $ 16,500 $ 8,000...
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: New Truck $ 38,000 Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value-now Salvage value-five years from now Present Truck $ 28,000 $ 15,000 $ 14,000 $ 14,500 $ 10,000 $ 9,000 $ 13,000 $ 12,000...
Bilboa Freightlines, SA, of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be ether overhauled or replaced with a new truck. The company has assembled the following information 28,889 15,00 538,00 $ Purchase cost (new) Remaining book value Overhaul needed now Annual cash operating costs Salvage value- Salvage value-five years from now $ 14,5ee $ 13, $ 18, $9.99 $123 If the company keeps and overhauls its present delivery truck...
Bilboa Freightlines, SA, of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information Now Truck $50,000 Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value-now Salvage value-five years from now Present Truck $ 35,000 $ 25,000 $ 24,000 $ 18,500 $ 15,000 $ 11,000 $ 18,000 $ 9,000 If...
Hello I am hoping to get some help with the following question, thank you! Bilboa Freightlines, S.A. of Panama has a small truck that it uses for local deliveries. The truck is in bad repair and must be either overhauled or replaced with a new truck. The company has assembled the following information (Panama uses the U.S. dollar as its currency) Present New Truck Truck Purchase cost new Remaining book value Overhaul needed novw Annual cash operating costs Salvage value...
RE Bilboa Freightlines, SA, of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: New Truck $ 38,000 Purchase cost (new) Remaining book value Overhaul needed now Annual cash operating costs Salvage value-now Salvage value-five years from now Present Truck $ 28,000 $ 15,000 $ 14,000 $ 14,500 $ 10,000 $ 9,999 $ 13,000 $...