KarenKolasinski.ABIWE6 -...

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ABI-WE 6:  Speedy Delivery Company Business Issue  Source data: ∙  Projected cost of a new truck $200,000 ∙  Salvage value of new truck $15,000 ∙  Estimated life of the new truck (based on the number of miles driven each year) is four years. ∙  Expected increase in annual cash flow (resulting from increased sales due to the increase in capacity) is $80,000. ∙  The company's minimum required rate of return on investments such as this is 15%. Required: 1 Using the data in the table, compute the following to evaluate your recommendation to buy the new truck:  Net Present Value (NPV) Internal Rate of Return (IRR) Payback Period (Original Investment/Annual Net Cash Inflow) Accounting Rate of Return (Cash inflow-Cash outflow-Depreciation Expense/Original investment) 2 3 4 Use all 10 Excel functions in Excel Issues tab and make sure your answers are printable on 8 1/2 X 11" paper(s).  TOPIC: Capital Budgeting (CH 13) ( v2. some helpful comments in red) The owner of a local transportation business, Speedy Delivery Company, has asked your help in analyzing whether or not to purchase a new delivery truck.  Your interest  in supply chain management, finance, and managerial accounting makes you the ideal intern to help this company with this task.  Management provides the following  data for the prospective purchase: 
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This note was uploaded on 04/04/2011 for the course ACC 202 taught by Professor Sue during the Spring '10 term at Michigan State University.

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KarenKolasinski.ABIWE6 -...

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