Haulin' It Towing Company Is Considering Adding More Tow Trucks

question 33

Multiple Choice

Haulin' It Towing Company is considering adding more tow trucks to its fleet. The cost of the new trucks is $150,000. The project will utilize the risk adjusted discount, the firm has a beta of 1.3, the risk-free rate is 7%, and the return in the market is 15%. Should Haulin' It add the additional trucks if the expected increased revenues will be as follows? ? $$\begin{array} { | l | l | } \hline \text { Years } & \text { Cash Flows } \\\hline \hline 1 & \$ 80,000 \\\hline \hline 2 & \$ 95,000 \\\hline \hline 3 & \$ 110,000 \\\hline\end{array}$$

• A) No, the NPV of the project is -$15,175.19.
• B) Yes, the NPV of the project is $75,275.16.
• C) No, the NPV of the project is -$9,765.12.
• D) Yes, the NPV of the project is $55,050.92.

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