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ubstion 4 du Hypermarket has a pickup truck that it uses to deliver the online...

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Accounting

ubstion 4 du Hypermarket has a pickup truck that it uses to deliver the online weders so the cen mbled the following information Remaining book value. Ovedaal seeded now Annual cash operating costs Salvage value (now) Salvage value (seven years from now) SA73ED $27,000 $26,000 $19.500 $18,000 $10,000 $13,000 $13,000 If the company keeps and overhauls its old delivery truck currently in use, then the truck will be able for seven you. If new ki pre after which it will be traded in with another truck. The new truck would be diesel-operated, maulting in a statial diag The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 12% discount rate. Use the following les discount factor(s). 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 Lulu Hypermarket keep the old truck or purchase the new one? Why? EXHIBIT 14B-1 Present Value of $1; 25 percent. 8% 9% 10% 11% 12% 13 % 14% 15 % 16 % 17 % 18 % 19% 20% 21% 22% Table Summary: Table of present values of $1. Periods are listed in first column: 1-30 and 40. Columns are given for percents fo Periods 4% 5% 6% 7%

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