Calculate the net present value of investment

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Reference no: EM132058794

AM Express Inc. is considering the purchase of an additional delivery vehicle for $55,000 on January 1, 2018. The truck is expected to have a five-year life with an expected residual value of $25,000 at the end of five years. The additional revenues from the added delivery capacity are expected to be $82,000 per year for each of the next five years. The driver will cost $42,000 in 2018, with an expected salary increase of $1,000 for each year thereafter. The annual operating costs for the truck are estimated to be $5,000 per year. Calculate the net present value of this investment using an interest rate of 12%. (Show your work)

Reference no: EM132058794

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