Phil's Lawn Care Service is considering the purchase of a new company truck. Selected data, which may or may not be relevant to Phil's decision, appear below:
Cost of new truck $60,000
Incremental annual operating cash flows 25,000
Useful economic life (years)3
Terminal value of new truck 5,000
Cost of fully amortized old truck 35,000
Phil plans to amortize the new truck using the straight-line method (ignore the half-year convention). His company's marginal income tax rate is 25%, and the appropriate discount rate is 12%. He plans to give the fully-amortized old truck to his son for personal use.
Calculate the net present value of the investment in the new truck.

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The Answer of Phil's Lawn Care Service is considering the purchase of a new company truck. Selected data, which may or may not be relevant to Phil's decision, appear below:
Cost of new truck $60,000
Incremental annual operating cash flows 25,000
Useful economic life (years)3
Terminal value of new truck 5,000
Cost of fully amortized old truck 35,000
Phil plans to amortize the new truck using the straight-line method (ignore the half-year convention). His company's marginal income tax rate is 25%, and the appropriate discount rate is 12%. He plans to give the fully-amortized old truck to his son for personal use.
Calculate the net present value of the investment in the new truck.

Phil's Lawn Care Service Is Considering the Purchase of a New