Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s curr

[answerhappygod]

Linkin Corporation is considering purchasing a new delivery
truck. The truck has many advantages over the company’s current
truck (not the least of which is that it runs). The new truck would
cost $57,720. Because of the increased capacity, reduced
maintenance costs, and increased fuel economy, the new truck is
expected to generate cost savings of $7,800. At the end of 8 years,
the company will sell the truck for an estimated $28,100.
Traditionally the company has used a rule of thumb that a proposal
should not be accepted unless it has a payback period that is less
than 50% of the asset’s estimated useful life. Larry Newton, a new
manager, has suggested that the company should not rely solely on
the payback approach, but should also employ the net present value
method when evaluating new projects. The company’s cost of capital
is 8%. Click here to view PV table. (a) Compute the cash payback
period and net present value of the proposed investment. (If the
net present value is negative, use either a negative sign preceding
the number eg -45 or parentheses eg (45). Round answer for present
value to 0 decimal places, e.g. 125. Round answer for Payback
period to 1 decimal place, e.g. 10.5. For calculation purposes, use
5 decimal places as displayed in the factor table provided.) Cash
payback period Enter a number of years rounded to 1 decimal place
years Net present value $ enter a dollar amount rounded to 0
decimal places (b) Does the project meet the company’s cash payback
criteria? select an option Does it meet the net present value
criteria for acceptance? select an option