Spending $40,000 on a new truck would increase delivery revenues by $18,000 annually over the truck's 4-year life. Graph the relationship between NPV and the discount rate for this project. (Hint: Assume for simplicity that the relationship is linear and find two points on the line's graph.) Is this project acceptable at a discount rate of 16%? What is the highest discount rate at which this project is acceptable?

Question

Quizplus · Accepted Answer

The Answer of Spending $40,000 on a new truck would increase delivery revenues by $18,000 annually over the truck's 4-year life. Graph the relationship between NPV and the discount rate for this project. (Hint: Assume for simplicity that the relationship is linear and find two points on the line's graph.) Is this project acceptable at a discount rate of 16%? What is the highest discount rate at which this project is acceptable?

Spending $40,000 on a New Truck Would Increase Delivery Revenues