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UPS is considering the purchase of a electric truck that would cost $150,000 and would last for 5 years. At the end of 5 years, the truck would have a salvage value of $20,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $45,000. The company requires a minimum  return of 19% on all investment projects. The net present value of the proposed project is closest to (Ignore income taxes.):   PV factor of $1 annuity for 5 years at 19% is 3.058 and PV of $1 over 5 years is 0.419   A. $85,000   B. -$12,390   C. -$4,010   D. $145,990

UPS is considering the purchase of a electric truck that would cost $150,000 and would last for 5 years. At the end of 5 years, the truck would have a salvage value of $20,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $45,000. The company requires a minimum  return of 19% on all investment projects. The net present value of the proposed project is closest to (Ignore income taxes.):   PV factor of $1 annuity for 5 years at 19% is 3.058 and PV of $1 over 5 years is 0.419   A. $85,000   B. -$12,390   C. -$4,010   D. $145,990

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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UPS is considering the purchase of a electric truck that would cost $150,000 and would last for 5 years. At the end of 5 years, the truck would have a salvage value of $20,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $45,000. The company requires a minimum  return of 19% on all investment projects. The net present value of the proposed project is closest to (Ignore income taxes.):

 

PV factor of $1 annuity for 5 years at 19% is 3.058 and PV of $1 over 5 years is 0.419

 

A.

$85,000

 

B.

-$12,390

 

C.

-$4,010

 

D.

$145,990

 

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