1) A contractor is considering two backhoes for purchase, with the investment details for each backhoe shown in the table below Backhoe 1 Backho 2 Initial cost Annual benefit Annual maintenance cost Salvage value Useful life (years) $200,000 $105,000 $5,000 $50,000 $450,000 $140,000 $20,000 $150,000 12 Considering benefits and costs over the full lifetimes of the backhoes, which backhoe should the contractor purchase based on: a) Benefit-cost ratio b) Benefit-cost difference c) Benefit-cost ratio using incremental analysis d) Benefit-cost difference using incremental analysis In general, the time value of money with an appropriate discount rate should be considered when making calculations of this sort. However, for simplicity, you need not consider any discount rate in your calculations for this problem. 2) You are building a new movie theater in Atlantic Station, and have two options. The first is to build a large theater for S1.7 million that will generate S350,000 in profit a year. The other option is to build a smaller theater for $800,000 that will generate $160,000 in profit a year Assume that revenue is equally distributed over the year. Using the payback method (you need not take into account the discounting of future cash flows for this problem), which option would you choose? 3) You are a glass and glazing subcontractor considering whether or not to bid on a job to do the windows work for an apartment complex project. You charge $500 for each window, with 80% of that going towards materials and labor, and 20% going towards overhead and profit Your fixed costs, covering administrative costs, rent, management salaries, etc., total $100,000. At least how many windows do there need to be on the project for you to break even on this contract? If you can decrease your materials and labor costs to 78% of the window price, at least how many windows do you need to furnish and install to break even