Develop the project five-year cash flows

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Reference no: EM131344100

Meade Metals Inc. plans to start doing its own deliveries instead of using an outside service for which it has been paying $150,000 per year. To make the change, Meade will purchase a $300,000 truck that will depreciate straight-line over 10 years to a $35,000 salvage value. Annual operating expenses are estimated at $80,000, including insurance, fuel, and maintenance on the truck, as well as the cost of a driver. Management plans to sell the truck after five years for $100,000. Mead's tax rate is 40%. Develop the project's five-year cash flows. (Hint: Treat as a replacement project. Savings are the difference in the contractor's cost and that of operating the truck with an old asset sale in the last year.)

Total Year 5 Cash Flow = $

Reference no: EM131344100

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