Need help with part B ### Finch Delivery Investment AnalysisFinch Delivery is a small company that transports business packages between New York and Chicago. It uses a fleet of vans to move packages and employs a common carrier to deliver them between two depots in the cities. Recently, Finch Delivery acquired $5.5 million in cash capital to invest wisely.**Investment Proposals:**1. **Todd Payne's Proposal (Operations Manager):** - Expand the fleet of city vans at a cost of $800,000. - Expected increase in cash inflows: $340,000 per year. - Vans have a four-year useful life, a combined salvage value of $90,000, and require additional working capital of $33,000 (recovered in year four).2. **Oscar Vance's Proposal (Chief Accountant):** - Purchase large trucks to deliver packages. - Expected cost of trucks: $880,000, with a four-year useful life and $74,000 salvage value. - Up-front training costs: $17,000. - Expected to improve savings and cash outflows.**Financial Evaluation:**Both investment alternatives were evaluated using the **Net Present Value (NPV)** and **Present Value Index (PVI)** methods, with a required rate of return of 16%.#### Cash Inflow Data:- **Year 1:** $170,000- **Year 2:** $314,000- **Year 3:** $396,000- **Year 4:** $459,000#### Results from Analysis:- **City Vans:** - NPV: $191,228.34 - PVI: 0.20- **Trucks:** - NPV: $26,005.85 - PVI: 0.07**Conclusion:**The analysis shows that the purchase of city vans results in a higher NPV and PVI compared to the purchase of trucks, indicating a potentially more profitable investment. Intermediate calculations and final answers are rounded to two decimal places for precision.

The net present value of an investment or project indicates whether or not it will provide positive benefits to a company. The discount rate, project intervals, and future cash flows each impact the net present value. An investment's net present value is the sum of all future cash flows discounted to the present value. It makes capital allocation easier. To make strategic choices, it is important to assess each investment alternative or possible project.In the given case, there are two projects in the same time frame. Using the NPV approach the best possible alternative is determined. The highest NPV will be selected. Since the depreciation rate is not mentioned, the effect of a "Tax Shield on Depreciation" is not taken into consideration.The Computation of NPV for Alternative 1- Van purchase is as follows:Formula:Results:The Computation of NPV for Alternative 2- Truck purchase is as follows:Formula:Results:Therefore,NPV of Alternative 1 is $1,91,283.84NPV Index of Alternative 1 is 0.23NPV of Alternative 2 is $26,005.85NPV Index of Alternative 2 is 0.03

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Finch Delivery is a small company that transports business packages between New York and Chicago. It operates a fleet of small vans that moves packages to and from a central depot within each city and uses a common carrier to deliver the packages between the depots in the two cities. Finch Delivery recently acquired approximately $5.5 million of cash capital from its owners, and its president, George Hay, is trying to Identify the most profitable way to Invest these funds. Todd Payne, the company's operations manager, belleves that the money should be used to expand the fleet of city vans at a cost of $800,000. He argues that more vans would enable the company to expand its services Into new markets, thereby increasing the revenue base. More specifically, he expects cash inflows to increase by $340,000 per year. The additional vans are expected to have an average useful life of four years and a combined salvage value of $99,000. Operating the vans will require additional working capital of $33,000, which will be recovered at the end of the fourth year. In contrast, Oscar Vance, the company's chief accountant, believes that the funds should be used to purchase large trucks to deliver the packages between the depots in the two cities. The conversion process would produce continuing improvement in operating savings and reduce cash outflows as follows. Year 1 $170,000 Year 2 $314,000 Year 3 $396,000 Year 4 $450,000 The large trucks are expected to cost $880,000 and to have a four-year useful life and an $74,000 salvage value. In addition to the purchase price of the trucks, up-front training costs are expected to amount to $17,000. Finch Delivery's management has established a 16 percent desired rate of return. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required a.&b. Determine the net present value and present value Index for each Investment alternative. Note: Round your Intermediate calculations and final answers to 2 decimal places. Enter your answer in dollars and not in millions.