a. Alphas net worth (=value) at EOY5.

b. Betas net worth at EOY0.

c. Gammas annual equivalent worth (AEW).

d Betas AEW.

e. The best of the three backhoes based on the AEW decision criterion.

f. The best of the three backhoes based on the NPW decision criterion.

Safeway, a road construction company, must purchase a new backhoe to meet the growing demands for road construction and resurfacing. The key parameters of the three backhoes under scrutiny are provided below. Parameters 1. Initial Cost ($) 2. Revenues ($) Alpha Beta Gamma 600,000 660,000 725,000 $395,000 at EOY1 increasing annually to $385,000 at EOY5 by 421,000 EOY1 increasing $2,000; annually from annually to 405,000 at EOY1 to EOY10 EOY5 by 3% EOY6 decreasing annually to EOY10 by 1% 275,000 at EOY1 increasing 261,000 at $225,000 at annually to EOY1 EOY1 increasing EOY5 by $2,800; increasing annually to 290,000 at EOY6 EOY5 by $2,000 annually to decreasing EOY10 by 1% annually to EOY10 by 2% 10,000 0 -5,000 5 years 10 years 10 years All parameter values are fictitious. EOY = End-of-year Industry Standard = 2.5 years MARR = 10% 3. Operating Costs ($) 4. End-of-life salvage value ($). 5. Useful life (years) n 1 2 3 4 5 CO 7 8 9 10 11 12 13 14 15 16 17 18 19 20 DISCRETE CASH FLOWS AND DISCRETE COMPOUNDING 10.00 % DISCRETE RATE OF INTEREST (F/P,i%,n) (P/F,1%,n) (A/P,1%,n) (PIA,1%,n) (A/F,i%,n) (FIA,i%,n) (A/G,1%,n) (P/G,1%,n) 1.1000 0.9091 1.1000 0.9091 1.0000 1.0000 0.0000 0.0000 1.2100 0.8264 0.5762 1.7355 0.4762 2.1000 0.4762 0.8264 1.3310 0.7513 0.4021 2.4869 0.3021 3.3100 0.9366 2.3291 1.4641 0.6830 0.3155 3.1699 0.2155 4.6410 1.3812 4.3781 1.6105 0.6209 0.2638 3.7908 0.1638 6.1051 1.8101 6.8618 1.7716 0.5645 0.2296 4.3553 0.1296 7.7156 2.2236 9.6842 1.9487 0.5132 0.2054 4.8684 0.1054 9.4872 2.6216 12.7631 2.1436 0.4665 0.1874 5.3349 0.0874 11.4359 3.0045 16.0287 2.3579 0.4241 0.1736 5.7590 0.0736 13.5795 3.3724 19.4215 2.5937 0.3855 0.1627 6.1446 0.0627 15.9374 3.7255 22.8913 2.8531 0.3505 0.1540 6.4951 0.0540 18.5312 4.0641 26.3963 3.1384 0.3186 0.1468 6.8137 0.0468 21.3843 4.3884 29.9012 3.4523 0.2897 0.1408 7.1034 0.0408 24.5227 4.6988 33.3772 3.7975 0.2633 0.1357 7.3667 0.0357 27.9750 4.9955 36.8005 4.1772 0.2394 0.1315 7.6061 0.0315 31.7725 5.2789 40.1520 4.5950 0.2176 0.1278 7.8237 0.0278 35.9497 5.5493 43.4164 5.0545 0.1978 0.1247 8.0216 0.0247 40.5447 5.8071 46.5819 5.5599 0.1799 0.1219 8.2014 0.0219 45.5992 6.0526 49.6395 6.1159 0.1635 0.1195 8.3649 0.0195 51.1591 6.2861 52.5827 6.7275 0.1486 0.1175 8.5136 0.0175 57.2750 6.5081 55.4069 Safeway, a road construction company, must purchase a new backhoe to meet the growing demands for road construction and resurfacing. The key parameters of the three backhoes under scrutiny are provided below. Parameters 1. Initial Cost ($) 2. Revenues ($) Alpha Beta Gamma 600,000 660,000 725,000 $395,000 at EOY1 increasing annually to $385,000 at EOY5 by 421,000 EOY1 increasing $2,000; annually from annually to 405,000 at EOY1 to EOY10 EOY5 by 3% EOY6 decreasing annually to EOY10 by 1% 275,000 at EOY1 increasing 261,000 at $225,000 at annually to EOY1 EOY1 increasing EOY5 by $2,800; increasing annually to 290,000 at EOY6 EOY5 by $2,000 annually to decreasing EOY10 by 1% annually to EOY10 by 2% 10,000 0 -5,000 5 years 10 years 10 years All parameter values are fictitious. EOY = End-of-year Industry Standard = 2.5 years MARR = 10% 3. Operating Costs ($) 4. End-of-life salvage value ($). 5. Useful life (years) n 1 2 3 4 5 CO 7 8 9 10 11 12 13 14 15 16 17 18 19 20 DISCRETE CASH FLOWS AND DISCRETE COMPOUNDING 10.00 % DISCRETE RATE OF INTEREST (F/P,i%,n) (P/F,1%,n) (A/P,1%,n) (PIA,1%,n) (A/F,i%,n) (FIA,i%,n) (A/G,1%,n) (P/G,1%,n) 1.1000 0.9091 1.1000 0.9091 1.0000 1.0000 0.0000 0.0000 1.2100 0.8264 0.5762 1.7355 0.4762 2.1000 0.4762 0.8264 1.3310 0.7513 0.4021 2.4869 0.3021 3.3100 0.9366 2.3291 1.4641 0.6830 0.3155 3.1699 0.2155 4.6410 1.3812 4.3781 1.6105 0.6209 0.2638 3.7908 0.1638 6.1051 1.8101 6.8618 1.7716 0.5645 0.2296 4.3553 0.1296 7.7156 2.2236 9.6842 1.9487 0.5132 0.2054 4.8684 0.1054 9.4872 2.6216 12.7631 2.1436 0.4665 0.1874 5.3349 0.0874 11.4359 3.0045 16.0287 2.3579 0.4241 0.1736 5.7590 0.0736 13.5795 3.3724 19.4215 2.5937 0.3855 0.1627 6.1446 0.0627 15.9374 3.7255 22.8913 2.8531 0.3505 0.1540 6.4951 0.0540 18.5312 4.0641 26.3963 3.1384 0.3186 0.1468 6.8137 0.0468 21.3843 4.3884 29.9012 3.4523 0.2897 0.1408 7.1034 0.0408 24.5227 4.6988 33.3772 3.7975 0.2633 0.1357 7.3667 0.0357 27.9750 4.9955 36.8005 4.1772 0.2394 0.1315 7.6061 0.0315 31.7725 5.2789 40.1520 4.5950 0.2176 0.1278 7.8237 0.0278 35.9497 5.5493 43.4164 5.0545 0.1978 0.1247 8.0216 0.0247 40.5447 5.8071 46.5819 5.5599 0.1799 0.1219 8.2014 0.0219 45.5992 6.0526 49.6395 6.1159 0.1635 0.1195 8.3649 0.0195 51.1591 6.2861 52.5827 6.7275 0.1486 0.1175 8.5136 0.0175 57.2750 6.5081 55.4069