A delivery company is expanding its fleet by 5 vans at a total cost of $100,000.

Question

A delivery company is expanding its fleet by 5 vans at a total cost of $100,000.  Operating and maintenance costs for the new vehicles are projected to be $25,000/year for the next 8 years.  After eight years, the vans will be sold for a total of $10,000.  Annual revenues are expected to increase $50,000 with the expanded fleet.  Draw a cash flow diagram and calculate what is the company's rate of return on the purchase?

I think we would use PW (NPV) to solve this.  I am not looking for the answers, just  direction please.  

Explanation / Answer

A delivery company is expanding its fleet by 5 vans at a total cost of $100,000.

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