An electric powerline company is pondering the replacement of an aging backhoes. The key parameters of the three backhoes under scrutiny are provided below. Delta Parameters 1. Initial Cost Epsilon 375,000 Zeta 425,000 2. Revenues ($) 325,000 290,000 at EOY1 decreasing by $2,000 annually thereafter 185,000 at EOY1 increasing by 3% annually thereafter 210,000 at EOY1 decreasing by $2,000 annually thereafter 215,000 at EOY1 increasing by $2,000 annually thereafter 3. Operating costs ($) 155,000 at EOY1 increasing by EOY1-EOY8 = 150,000; 2% annually E OY9-EOY16 = 175,000 thereafter 60,000 40,000 4. End-of-life salvage value ($) 5. Useful life (years) 16 EOY = End-of-year Industry Standard = 4 years MARR = 10% Zeta's net worth (NEW) at EOY16 (rounded to the nearest $100) of a) $378,800; b) $497,000; c) $512,900; d) $524,300. Epsilon's Net Present Worth (NPW) (rounded to the nearest $100) is a) $51,600; b) $53,700; c) $64,100; d) $66,800. Delta's net worth (NFW) at EOY4 (rounded to the nearest $100) is a) $43,900; b) $48,000; c) $49,100; d) $49,700. Epsilon's Annual Equivalent Worth (AEW) (rounded to the nearest $100) a) $12,500; b) $13,500; c) $14,900; d) $16,200. 5. Zeta's AEW (rounded to the nearest $100) over 30 years (it was repeated several times) is a) $11,200; b) $13,800; c) $15,100; d) $15,800. 6. The best backhoe based on the AEW method is a) Delta; b) Epsilon; c) Zeta; d) None of the backhoes is acceptable. 7. The best backhoe based on the NFW method is a) Delta; b) Epsilon; c) Zeta; d) None of the backhoes is acceptable. DISCRETE CASH FLOWS AND DISCRETE COMPOUNDING 10.00 % DISCRETE RATE OF INTEREST i% = 0.1000 k% = 0.1200 (F/P,1%,n) (P/F,i%,n) (A/P,1%,n) (PIA,1%,n) (A/F,i%,n) (FIA,i%,n) (A/G,1%,n) (P/G,1%,n) (F/G,1%,n) | 1.1000 1.2100 1.3310 1.4641 1.6105 1.1000 0.5762 0.4021 0.3155 0.9091 1.7355 2.4869 3.1699 1.0000 0.4762 0.3021 0.2155 0.2638 3.7908 0.1638 1.7716 1.9487 2.1436 2.3579 2.5937 2.8531 3.13841 3.4523 3.7975 4.1772 4.5950 5.0545 5.5599 6.1159 6.7275 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.3855 0.3505 0.3186 0.2897 0.2633 0.2394 0.2176 0.1978 0.1799 0.1635 0.1486 0.2296 0.2054 0.1874 0.1736 0.1627 0.1540 0.1468 0.1408 0.1357 0.1315 0.1278 0.1247 0.1219 0.1195 0.1175 4.3553 4.8684 5.3349 5.7590 6.1446 6.4951 6.8137 7.1034 7.3667 7.6061 7.8237 8.0216 8.2014 8.3649 8.5136 | 0.1296 0.1054 0.0874 0.0736 0.0627 0.0540 0.0468 0.0408 0.0357 0.0315 0.0278 0.0247 0.0219 0.0195 0.0175 1 .0000 2.1000 3.3100 4.6410 6.1051 7.7156 9.4872 11.4359 13.5795 15.9374 18.5312 21.3843 24.5227 27.9750 31.7725 35.9497 40.5447 45.5992 51.1591 57.2750 0.0000 0.0000 0.4762 0.8264 0.9366 2.3291 1.3812 4.3781 1.8101 6.8618 2.2236 9.6842 2.6216 12.7631 3.0045 16.0287 3.3724 19.4215 3.7255 22.8913 4.0641 26.3963 4.3884 29.9012 4.6988 33.3772 4.9955 36.8005 5.2789 40.1520 5.5493 43.4164 5.8071 46.5819 6.052649.6395 6.2861 52.5827 6.5081 55.4069 0.0000 1.0000 3.1000 6.4100 11.0510 17.1561 24.8717 34.3589 45.7948 59.3742 75.3117 93.8428 115.2271 139.7498 167.7248 199.4973 235.4470 275.9917 321.5909 372.7500 (P/C,i,k.N) (PIC.I.K.N) ik i=k 0.9091 0.9091 1.8347 1.8182 2.7772 2.7273 3.7367 3.6364 4.7138 4.5455 5.7086 5.4545 6.7215 6.3636 7.7528 7.2727 8.8028 8.1818 9.8719 9.0909 10.9605 10.0000 12.0689 10.9091 13.1974 11.8182 14.3465 12.7273 15.5164 13.6364 16.7076 14.5455 17.9205 15.4545 19.1554 | 16.3636 | 20.4128 17.2727 21.6930 18.1818 | 20 An electric powerline company is pondering the replacement of an aging backhoes. The key parameters of the three backhoes under scrutiny are provided below. Delta Parameters 1. Initial Cost Epsilon 375,000 Zeta 425,000 2. Revenues ($) 325,000 290,000 at EOY1 decreasing by $2,000 annually thereafter 185,000 at EOY1 increasing by 3% annually thereafter 210,000 at EOY1 decreasing by $2,000 annually thereafter 215,000 at EOY1 increasing by $2,000 annually thereafter 3. Operating costs ($) 155,000 at EOY1 increasing by EOY1-EOY8 = 150,000; 2% annually E OY9-EOY16 = 175,000 thereafter 60,000 40,000 4. End-of-life salvage value ($) 5. Useful life (years) 16 EOY = End-of-year Industry Standard = 4 years MARR = 10% Zeta's net worth (NEW) at EOY16 (rounded to the nearest $100) of a) $378,800; b) $497,000; c) $512,900; d) $524,300. Epsilon's Net Present Worth (NPW) (rounded to the nearest $100) is a) $51,600; b) $53,700; c) $64,100; d) $66,800. Delta's net worth (NFW) at EOY4 (rounded to the nearest $100) is a) $43,900; b) $48,000; c) $49,100; d) $49,700. Epsilon's Annual Equivalent Worth (AEW) (rounded to the nearest $100) a) $12,500; b) $13,500; c) $14,900; d) $16,200. 5. Zeta's AEW (rounded to the nearest $100) over 30 years (it was repeated several times) is a) $11,200; b) $13,800; c) $15,100; d) $15,800. 6. The best backhoe based on the AEW method is a) Delta; b) Epsilon; c) Zeta; d) None of the backhoes is acceptable. 7. The best backhoe based on the NFW method is a) Delta; b) Epsilon; c) Zeta; d) None of the backhoes is acceptable. DISCRETE CASH FLOWS AND DISCRETE COMPOUNDING 10.00 % DISCRETE RATE OF INTEREST i% = 0.1000 k% = 0.1200 (F/P,1%,n) (P/F,i%,n) (A/P,1%,n) (PIA,1%,n) (A/F,i%,n) (FIA,i%,n) (A/G,1%,n) (P/G,1%,n) (F/G,1%,n) | 1.1000 1.2100 1.3310 1.4641 1.6105 1.1000 0.5762 0.4021 0.3155 0.9091 1.7355 2.4869 3.1699 1.0000 0.4762 0.3021 0.2155 0.2638 3.7908 0.1638 1.7716 1.9487 2.1436 2.3579 2.5937 2.8531 3.13841 3.4523 3.7975 4.1772 4.5950 5.0545 5.5599 6.1159 6.7275 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.3855 0.3505 0.3186 0.2897 0.2633 0.2394 0.2176 0.1978 0.1799 0.1635 0.1486 0.2296 0.2054 0.1874 0.1736 0.1627 0.1540 0.1468 0.1408 0.1357 0.1315 0.1278 0.1247 0.1219 0.1195 0.1175 4.3553 4.8684 5.3349 5.7590 6.1446 6.4951 6.8137 7.1034 7.3667 7.6061 7.8237 8.0216 8.2014 8.3649 8.5136 | 0.1296 0.1054 0.0874 0.0736 0.0627 0.0540 0.0468 0.0408 0.0357 0.0315 0.0278 0.0247 0.0219 0.0195 0.0175 1 .0000 2.1000 3.3100 4.6410 6.1051 7.7156 9.4872 11.4359 13.5795 15.9374 18.5312 21.3843 24.5227 27.9750 31.7725 35.9497 40.5447 45.5992 51.1591 57.2750 0.0000 0.0000 0.4762 0.8264 0.9366 2.3291 1.3812 4.3781 1.8101 6.8618 2.2236 9.6842 2.6216 12.7631 3.0045 16.0287 3.3724 19.4215 3.7255 22.8913 4.0641 26.3963 4.3884 29.9012 4.6988 33.3772 4.9955 36.8005 5.2789 40.1520 5.5493 43.4164 5.8071 46.5819 6.052649.6395 6.2861 52.5827 6.5081 55.4069 0.0000 1.0000 3.1000 6.4100 11.0510 17.1561 24.8717 34.3589 45.7948 59.3742 75.3117 93.8428 115.2271 139.7498 167.7248 199.4973 235.4470 275.9917 321.5909 372.7500 (P/C,i,k.N) (PIC.I.K.N) ik i=k 0.9091 0.9091 1.8347 1.8182 2.7772 2.7273 3.7367 3.6364 4.7138 4.5455 5.7086 5.4545 6.7215 6.3636 7.7528 7.2727 8.8028 8.1818 9.8719 9.0909 10.9605 10.0000 12.0689 10.9091 13.1974 11.8182 14.3465 12.7273 15.5164 13.6364 16.7076 14.5455 17.9205 15.4545 19.1554 | 16.3636 | 20.4128 17.2727 21.6930 18.1818 | 20