What is the npv of buying the truck on the terms


Problem

Laura wants to buy a delivery truck. The truck costs $111,000, and will allow her to increase her after tax pro?ts by $6,000 per year for the next 10 years. She will borrow 96% of the cost of the truck for 10 years, at an interest rate of 7%. Laura's unlevered cost of capital is 9% and her tax rate is 29%. The loan includes a $1,000 application fee. What is the NPV of buying the truck on these terms?

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