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Pirate Company produces planks. They are currently consideringreplacing their fleet of delivery trucks. Replacing the old truckswill require an initial outlay of $300,000 but Pirate Company willsave $200,000 per year in fuel costs over the 6 year life of theproject. The trucks will be depreciated at a cost of $50,000 peryear. If the tax rate is 40% and WACC is 8%, should Pirate Companyreplace their current fleet of delivery trucks? Use the NPVcriteria to make your decision.
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