Bilboa Freightlines, SA, of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be eithen overhauled or replaced with a new truck. The company has assembled the following information: Present Truck New Truck Purchase cost new $ 36,000 Remaining book value Overhaul needed now Annual cash operating costs Salvage value-now Salvage value-five years from now $ 27,000 $ 14,000 $ 13,000 $ 14,000 $ 9,000 $ 5,000 $ 11,500 $ 8,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, It will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 13% discount rate. Click here to view Exhibit 148-1 and Exhibit 148-2, to determine the appropriate discount factor(s) using tables. 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 Bilboa Freightlines keep the old truck or purchase the new one? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the net present value of the "keep the old truck" alternative? (Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.) Net present value Required 1 Required 2 >

BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Machine A Machine B Original cost $ 77,500 $ 186,000 Estimated life 8 years 8 years Salvage value $ 19,500 $ 39,600 Estimated annual cash inflows $ 5,040 $ 9,800 Estimated annual cash outflows Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (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 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Machine A Machine B Net present value Profitability index Which machine should be purchased? should be…

Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information:      PresentTruck NewTruck Purchase cost new $ 23,000   $ 29,000   Remaining book value $ 11,000     -   Overhaul needed now $ 10,000     -   Annual cash operating costs $ 12,000   $ 8,500   Salvage value-now $ 6,000     -   Salvage value-five years from now $ 5,000   $ 5,000          If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above.   The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 12%…

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Wildhorse's Auto Care is considering the purchase of a new tow truck. The garage doesn't currently have a tow truck, and the $59,950 price tag for a new truck would represent a major expenditure. Wildhorse Austen, owner of the garage, has compiled the following estimates in trying to determine whether the tow truck should be purchased. Initial cost $59,950 Estimated useful life 8 years Net annual cash flows from towing $7,990 Overhaul costs (end of year 4) $5,970 Salvage value $12,000 Show Transcribed Text د Wildhorse's good friend, Rick Ryan, stopped by. He is trying to convince Wildhorse that the tow truck will have other benefits that Wildhorse hasn't even considered. First, he says, cars that need towing need to be fixed. Thus, when Wildhorse tows them to her facility, her repair revenues will increase. Second, he notes that the tow truck could have a plow mounted on it, thus saving Wildhorse the cost of plowing her parking lot. (Rick will give her a used plow blade for free if…

Payash Freight Company owns a truck that cost $31,000. Currently, the truck's book value is $23,000, and its expected remaining useful life is four years. Payash has the opportunity to purchase for $24,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,900 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $14,000. Required Calculate the total relevant costs. Should payash replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out?

Your company is considering the purchase of a new 623K Wheel Tractor-Scraper. Use the following information to calculate the hourly owning costs, hourly operating costs, and total owning and operating costs.  -         Delivered price (with tires): $420,000 -         Cost of Tires: $30,000 and their life is determined by the average operation in zone B. -         Salvage value is zero - the equipment is new and it is anticipated to be used for 5 years, until end of its service life. -         Anticipated operating hours per year: 2,000 hrs/yr -         Simple interest rate for purchase loan: 12% -         Annual cost of Insurance: $5,500 (See optional method) -         Property tax rate: 2% -         Fuel use will be average value in medium range -         Cost of fuel: $3.10 per gallon -         Hourly Maintenance Cost: $5.00 per hour -         Repair cost: $11.00 per hour -         Operator cost (with fringes): $75 per hour -         No undercarriage or special wear items costs…

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Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information:      Present Truck New Truck Purchase cost new $ 30,000 $ 39,000 Remaining book value $ 17,000 - Overhaul needed now $ 16,000 - Annual cash operating costs $ 15,500 $ 14,000 Salvage value-now $ 9,000 - Salvage value-five years from now $ 8,000 $ 10,000      If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above.   The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate.   Click here to view…

LF Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information:                                                             Old Machine              New Machine Original cost                                       $10,900                       $8,200 Useful life                                           10 years                       3 years Current age                                         7 years                         0 years Remaining useful life                         3 years                         3 years Accumulated depreciation                  $7,630                         N/A Book value                                          $3,270                         N/A Current disposal value                         $2,700                         $0 Annual cash operating costs               $17,500                       $14,500 LF Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. What is…