Business, 27.12.2020 15:20 hipposaresofluffy

AM Express Inc. is considering 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. Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.87 0.833
2 0.89 0.826 0.797 0.756 0.694
3 0.84 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162

Required:
Determine the expected annual net cash flows from the delivery truck investment for 20Y1.

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AM Express Inc. is considering the purchase of an additional delivery vehicle for $55,000 on January...

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