Accountants at the firm have forecasted

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Reference no: EM131449942

Gruber Landscape is planning to buy a new all purpose utility truck for $20,000. The truck has a useful life of 10 years at which time it can be sold for $3,000. Accountants at the firm have forecasted the following end-of-year net after-tax cash flows for the truck:

Year Cash Flow

1 4,500

2 4,500

3 4,000

4 4,000

5 3,500

6 3,500

7 3,500

8 (3,500)

9 3,500

10 3,500

The company requires a hurdle rate of 12.5% for all projects. Using NPV and IRR demonstrate if the truck should be purchased. Show all your work

Reference no: EM131449942

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