1.690 an investment of $332,000 for a buldozer. The bu charged $120 per hour for bulldozer work. The burderer operator costs $31 per hour in wages and benefits. The buldoer is expected to require a i s expected to operate for 2,000 hours per year for seven years. Oustomers will be buidores fuel that is expected to cost $41 per hour of bulldozer operation l mateicoting 520,000. The Present Value of an Annuity of $1 at Compound Interest Year 104 124 15% 20% 0.943 0.909 0.893 0.870 0.833 1.735 1.526 1.528 2.487 2.402 2.283 3.037 3.79 3.605 2.991 3.326 4.36 3.605 5.335 5.759 4.772 7.360 6.145 5.019 4.199 3.170 2.855 1.833 2.673 3.465 4.212 4.917 5.582 6.210 2.106 2.589 4.355 4.564 3.785 4.160 4,487 3.837 5.328 5.650 4.031 .. Determine the equal net cash flows from operating the buildrer. Use a minus sign to indicate cash out tows. Briggs Excavation Company qual Annual Net Cash Flows Cash inflows Hours of operation veure per year Cash out hows: Hours of operation 2000 Fuel cost per hour Labor cost per hour Total fuel and labor costs per hour XSMW172 Fuel and labor costs per year -144,000 Maintenance costs per year 20.000 Annual net cash flows Che My a. Subtract the operating expenses Chourly fiel and labor costs, multiplied by the operating hours, plus the annual maintenance costs) from the revenues (operating hours multiplied by the hourly revenue). Learning Objective 3. of an annuity of $1 table above. Round to the nearest dollar b. Determine the net present value of the investment, assuming that the desired rate of return is 15%. Use the prese If required, use the minus sign to indicate a negative net present value. Present value of annual net cash flows 706,560 X Amount to be invested $-664,200 $ 42,360 X Net present value c. Should Broos Excavation invest in the bulldozer based on this analisis? Bus Next > A v e. Rour b. Determine the net present Value of the investment, assuming that the desired rate of return 5 1995. use the present value annuity If required, use the minus sign to indicate a negative net present value. Present value of annual net cash flows $706,560 Amount to be invested $ -664,200 Net present value $ 42,360 X c. Should Briggs Excavation invest in the bulldozer, based on this analysis? No , because the bulldozer cost is more than the present value of the cash flows at the minimum desired rate of return of 15%. d. Determine the number of operating hours such that the present value of cash flows equals the amount to be invested. Round interim calculations and final answer number. 110,245 X hours
