Answer the following economics question from the information provided.

Paragon, a road construction company, must purchase a new paver to meet the growing demands for highway construction and resurfacing. The key parameters of the three pavers under scrutiny are provided below. Parameters A99 B88 C77 1. Initial Cost ($) 380,000 400,000 425,000 $290,000 at $300,000 at $310,000 from EOY1 increasing EOY1 EOY1 by $3,000 increasing by decreasing by 2. Revenues ($) annually 1% annually 3.0% annually thereafter thereafter. thereafter $125,000 at $175,000 at $185,000 at EOY1 EOY1 EOY1 3. Operating costs decreasing by decreasing by decreasing by ($) $1,000 annually 2% annually $2,500 annually thereafter. thereafter thereafter 4. End-of-life -6,000 45,000 30,000 salvage value ($) 5. Useful life (years) 3 years 4 years All parameter values are fictitious. EOY = End-of-year Industry Standard = 2.5 years MARR = 10% 6 years . 22. 23. 24. A99's External Rate of Return (ERR). C77's External Rate of Return (ERR). The incremental External Rate of Return (AERR) between pavers B88 and A99. The incremental External Rate of Return (AERR) between pavers C77 and A99. 25. 26. The best paver based on the external rate of return (ERR) method. n 1 2 3 4 5 6 7 8 9 DISCRETE CASH FLOWS AND DISCRETE COMPOUNDING 10.00 % DISCRETE RATE OF INTEREST (F/P,i%,n) (P/F,1%,n) (A/P,1%,n) (P/A,1%,n) (A/F,i%,n) (F/A,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 10 11 12 13 14 15 16 17 18 19 20 Paragon, a road construction company, must purchase a new paver to meet the growing demands for highway construction and resurfacing. The key parameters of the three pavers under scrutiny are provided below. Parameters A99 B88 C77 1. Initial Cost ($) 380,000 400,000 425,000 $290,000 at $300,000 at $310,000 from EOY1 increasing EOY1 EOY1 by $3,000 increasing by decreasing by 2. Revenues ($) annually 1% annually 3.0% annually thereafter thereafter. thereafter $125,000 at $175,000 at $185,000 at EOY1 EOY1 EOY1 3. Operating costs decreasing by decreasing by decreasing by ($) $1,000 annually 2% annually $2,500 annually thereafter. thereafter thereafter 4. End-of-life -6,000 45,000 30,000 salvage value ($) 5. Useful life (years) 3 years 4 years All parameter values are fictitious. EOY = End-of-year Industry Standard = 2.5 years MARR = 10% 6 years . 22. 23. 24. A99's External Rate of Return (ERR). C77's External Rate of Return (ERR). The incremental External Rate of Return (AERR) between pavers B88 and A99. The incremental External Rate of Return (AERR) between pavers C77 and A99. 25. 26. The best paver based on the external rate of return (ERR) method. n 1 2 3 4 5 6 7 8 9 DISCRETE CASH FLOWS AND DISCRETE COMPOUNDING 10.00 % DISCRETE RATE OF INTEREST (F/P,i%,n) (P/F,1%,n) (A/P,1%,n) (P/A,1%,n) (A/F,i%,n) (F/A,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 10 11 12 13 14 15 16 17 18 19 20