Bend Manufacturers is considering investing in a new truck that will be used to deliver its custom-made furniture.Ron Shop, Controller of Bend Manufacturers, is considering a truck which will cost $80,000 and which has a useful life of 5 years.The new truck will save $9,600 per year in operating costs which are realized at the end of each year.Ron believes if the new truck is purchased it could be sold for $64,500 at the end of its useful life.Bend's required rate of return is 10%.What is the new truck's net present value?
A) ($80)
B)($8,049)
C)($3,559)
D)$18,658

Question

Bend Manufacturers is considering investing in a new truck that will be used to deliver its custom-made furniture.Ron Shop, Controller of Bend Manufacturers, is considering a truck which will cost $80,000 and which has a useful life of 5 years.The new truck will save $9,600 per year in operating costs which are realized at the end of each year.Ron believes if the new truck is purchased it could be sold for $64,500 at the end of its useful life.Bend's required rate of return is 10%.What is the new truck's net present value?
A) ($80) 
B)($8,049) 
C)($3,559) 
D)$18,658

Quizplus · Accepted Answer

The Answer of Bend Manufacturers is considering investing in a new truck that will be used to deliver its custom-made furniture.Ron Shop, Controller of Bend Manufacturers, is considering a truck which will cost $80,000 and which has a useful life of 5 years.The new truck will save $9,600 per year in operating costs which are realized at the end of each year.Ron believes if the new truck is purchased it could be sold for $64,500 at the end of its useful life.Bend's required rate of return is 10%.What is the new truck's net present value?
A) ($80) 
B)($8,049) 
C)($3,559) 
D)$18,658

Bend Manufacturers Is Considering Investing in a New Truck That