A tractor and mower costs $25,500. At the present time. return of S6,550 at the ends of each of years 1 through 6. The equipment will be worth $3,000 when you are done using it at the end of year 6. Calculate the net present value of the food truck investment using a discount rate of 8%. You project you can earn a net 3. 4. A saw mill for cutting wood costs $23,500 at the present time. You can earm a net return of $6,800 at the end of year 1, $7,000 at the end of year 2, $7,200 at the end of year 3 and $7,300 at the end of year 4. The equipment will be worth $7,500 when you are done using it at the end of year 4. Calculate the net present value of the mill using a discount rate of 8%. Based on these raw NPV calculations, which investment looks better? comparison is not a good idea. 5. Explain why this Find the annuity which is equivalent each of the above investments NPV (questions 3 and 4). Based on the annuity equivalent, which investment is better? Why? 6. 7. Based on the information so far, which one would you choose? Why? Explain how you would set up the comparison as a 12 year cash flow and compute the NPV using the lowest common denominator number of years method. Which project would you expect to be the preferred project using this method? Why? 8