Cave Question 2 10 polints Lulu Hypermarket hns a pickup truck that it used to deliver the online orders to their custom

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Cave Question 2 10 Polints Lulu Hypermarket Hns A Pickup Truck That It Used To Deliver The Online Orders To Their Custom 1 (33.74 KiB) Viewed 43 times

Cave Question 2 10 polints Lulu Hypermarket hns a pickup truck that it used to deliver the online orders to their customers. The track must be either overhauled or replaced with a new track. The company is assembled the following information: old Truck New Track Purchase cost (new) $37,000 $47,000 Remaining book value $27,000 Overhaul needed now $26.000 Annual cash operating costs $19.500 $18,000 Salvage value (now) $10,000 Salvage value (seven years from now) $13,000 $13,000 If the company keeps and overhauls its old delivery truck currently in use, then the truck will be usable for seven more years. If a new truck is purchased, it will be used for seven years, after which it will be traded in with another truck. The new truck would be diesel-operated, resulting in a substantial reduction in anul operating costs, as shown above The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 12% discount tute. Use the following tables to determine the appropriate discount factor(s). Required: 1. What is the net present value of the "keep the old truck" alternative? 2. What is the net present value of the "purchase the new truck" alternative? 3. Should Lulu Hypermarket keep the old truck or purchase the new one? Why