Lowell Trucking Corporation is planning to purchase a new truck. The cost of the new truck will be $100,000. The new truck will be used for six years, but will require major repairs every two years at a cost of $25,000 each time. During its life of six years, the truck will provide cash inflow of $200,000 each year for years 1 and 2, $170,000 for years 3 and 4, and $140,000 for years 5 and 6. All costs of operating the truck, including taxes, will be $130,000 each year. After six years, the truck will be sold to a junk yard for $5,000. The company's weighted average cost of capital is 12%, and its average tax rate is 30 percent.
What is the NPV and profitability index of the truck purchase decision?
What is the IRR of the truck purchase decision?