ch 11 q 3

a. Subtract the operating expenses (hourly fuel and labor costs, multiplied by the operating hours, plus the annual maintenance costs) from the revenues (operating hours multiplied by the hourly revenue). Learning Objective 3. Determine the net present value of the investment, assuming that the desired rate of return is \12, Use the present value of an annuity of \\( \\$ 1 \\) table above. Round nearest dollar, If required, use the minus sign to indicate a negative net present value. a. Subtract the operating expenses (hourfy fuel and labor costs, multiplied by the operating hours, plus the annual maintenance costs) from the revenues (coperating hours multiplied by the hourly revenue). tearning Objective 3. b. Determine the net present value of the investment, asspming that the desired rate of return is \12. Use the present value of an annuity of \\( \\$ 1 \\) table above; Round to the nearest dollar, If required, use the minus sign to indicate a negative net present value. Whould Briggs Excavation invest in the bulldezer, based on this analysis? \\( \\checkmark \\), because the bulldorer cost is \\( \\checkmark \\) the present value of the cash flows st the minimum desired rate of retum of \12. 1. Determine the number of operating hours such that the present value of cash flows equals the amount to be invested. Round interim calculations and final answer to ne nearest whole number. hours TChed My Wert b. Muitiply the annual net cash flow by the present value of an annuity factor and subtract the amount to be invested. c. Which is more favorable? d. Set up an equation to solve for hours. Ariggs Excavation Company is planning an imestment of \\( \\$ 1,091,600 \\) for a bulldozer. The buldover is expected to operate for 4, coo hours per vear for 10 vears. Customers will be chorged \\( \\$ 135 \\) per hour for bulldover work. The bulidozer operator costs \\( \\$ 34 \\) per heur in wages and benefits: The builidozer is expected to require annusi maintenance costing \\( \\$ 40,000 \\). The bullober uses fuel that is expected to coss \\( \\$ 45 \\) per hour of bulldser operation. Present Value of an Annuitv of \\( \\$ 1 \\) at Commaned Internst a. Determine the equal annual net cash flows from operating the buldorer. Use a minis sign to incicate cash outflows