A landscaper is planning the purchase of a new truck to meet the growing demand on his business. The key parameters of the three trucks (Ford, Ram and GM) under scrutiny are provided below. GM 125,000 Parameters Ford 75,000 Ram 85,000 1. Initial Cost ($) 140,000 at EOY1166,000 at EOY1 increasing by 3% annually thereafter. 90,000 at EOY1 112,000 at EOY1 135,000 at EOY1 increasing by 4% annually thereafter. increasing by $3,000 annually thereafter. 209,000 annually 2. Revenues ($) increasing by 2% | increasing by $4,000 annually thereafter. 3. Operating Costs 4. End-of-life salvage 5. Useful life (years annually thereafter. 30,000 40,000 15,000 value ($ 10 . EOY End-of-year . Industry Standard 4 years MARR = 10% 1. Ford's Net Present Worth (NPW) (rounded to the nearest $100) is 2. Ram's worth after the fifth (5th) year (rounded to the nearest $100) is 3. If a Ram truck was used for fifteen (15) years with no change to any of its a) $125,100; b) $132,100; c) $136,900; d) $141,200 a) $231,600; b) $238,000; c) $241,000; d) $246,900. original dollar value parameters, its annual equivalent worth (AEW) (rounded to the nearest $100) for the fifteen (15) years would be a) $37,900; b) $38,400; c) $39,000; d) $40,200. The best proposal based on the NPW method is a) Ford; b) Ram; c) GM. 4. 5. The best proposal based on the Net Future Worth (NFW) method is a) Ford; b) Ram; c) GM. 6. The best proposal based on the Annual Equivalent Method (AEW) method IS a) Ford; b) Ram; c) GM. 7. Based on the simple payback method, Ford's recovery period (nearest half or full year) is a) 1.5 years; b) 2.0; c) 2.5; d) 3.5. 8 Based on the simple payback method, GM's "project balance" after the first year is (rounded to the nearest $100) is a) $-51,000; b) $-42,000; c) $0; d) $65,700 Based on the discounted payback method, Ram's recovery period (nearest half or full year) is a) 2.0 years; b) 2.5; c) 3.0; d) 4.5 10. Based on the discounted payback method, GM's "project balance" after 3 years (rounded to the nearest $100) is a) $-12,600; b) $66,200; c) $98,000; c) $113,400; d) $128,900. 11.The best truck based on the simple payback method is a) Ford; b) Ram; c) GM 12. The best truck based on the discounted payback method is a) Ford; b) Ram; c) GM 13. GM's benefit/cost (B/C) ratio (second decimal; no rounding) is a) 0.98; b) 1.12; c) 1.23; d) 1.27 14.Ram's benefit/cost (B/C) ratio (second decimal; no rounding) is a) 1.01; b) 1.08; c) 1.15; d) 1.28
