O’Brien Salvage is considering the purchase of a new heavy duty truck. This truck will be picking up scrap from large industrial manufactures…

O’Brien Salvage is considering the purchase of a new heavy duty truck. This truck will be picking up scrap from large industrial manufactures thoughout the suburban chicago. This is a market that O’Brien until recently has been unable to enter. Use the following data and answer the questions that follow.Initial Investment … 118,000Annual Revenue…..60,000Annual Cash Expenses…..40,000Salvage Value………………25,000Useful Life………………10 yearsHurdle rate ……………….12%What is the net cash inflow annually?how much in annual depreciation expense?how much in annual net income?Calculate ROICalculate PaybackCalculate NPV and make a decision. what’s the most you would pay?Will IRR be more or less than the hurdle rate?

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