What is the npv for the truck


Problem:

Lotus Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this yeas capital budget. The projects are independent. The firms cost of capital is 12%. The after tax cash flows, including depreciation, for the truck and the pulley are as follows:

  • Year Truck Pulley
  • 0 -50000 -70000
  • 1 10000 15000
  • 2 10000 15000
  • 3 10000 15000
  • 4 10000 15000
  • 5 10000 15000
  • 6 10000 15000
  • 7 10000 15000

Requirement:

Question 1: What is the NPV for the truck?

Question 2: What is the NPV for the pulley?

Note: Please show how you came up with the solution.

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Accounting Basics: What is the npv for the truck
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