Do capital analysis on all 4 pieces of equipment and enter the results in the summary excel form. Make a decision as to which pieces of equipment are most profitable using the profitability index. Each auction sheet has various facts and information on them , you may or may not need all the information in your calculations.

1.

2005 Cat D8T Crawler Dozer

Item Number 5752023

Location Stringtown, Oklahoma, United States. 74569

Auction Date

Dec 6, time TBD

US $84,000

Meter Reading 26,109 Hours

Serial # KPZ00698

Cost of Capital 10% (due to age of equipment)

Hurdle rate 10%

Cash Flow $10,500 per year for 10 years

Depreciation 40,000 hours, Salvage $4,000, annual hours 4,000

Company cannot use financing sources available under its cost of capital average with local banks and lendin companies on this age of equipment. Therefore the cost of capital is higher. 2

2.

2016 Cat 966M Wheel Loader

Item Number 5721824

Location Hope Mills, North Carolina, United States. 28348

Auction Date Dec 6, time TBD

US $81,000

Salvage $1,000

Meter Reading 4,825 Hours

Serial # CAT0966MCR8D00203

Enclosed Cab, Air Conditioner, Air Ride Seat, Joystick Steering, Auxiliary Hydraulic Plumbing,

Life of asset: 10year

Cash Flow $12,200

Cost of Capital 7%

Hurdle rate 7%

3.

Peterbilt 348 4,000 gal 6x4 Water Truck

Item Number 5702336

Location Humble, Texas, United States. 77396

Auction Date Dec 6, time TBD

Mileage 21,461 Miles

VIN 2NP3LJ0X6KM614721

US $75,000

Depreciation total 50,000miles, 4,000 annual miles Salvage $5,000

Cash Flow $14,000 per year

Cost of Capital 7% Hurdle rate 7%

10 year life

4.

2021 Western Star 4700SB 6x4 T/A Dump Truck

Item Number 5606401

Location Quaker City, Ohio, United States. 43773

Auction Date

Dec 6, time TBD

ITEM DETAILS

Mileage 23,573 Miles

VIN 5KKHAXDV2MPMK9019

Detroit DD13 6 Cylinder 12.8L Diesel 525 hp Engine,

US $89,000

Cost of Capital 7% (new equipment rate)

Hurdle Rate 7%

Cash Flow $13,700

Depreciation 10 year SL, Salvage $2,000

\begin{tabular}{|l|l|l|l|l} \hline & & & & \\ \hline Equipment: Picture and Title: & & & & \\ \hline Initial Investment & & & & \\ \hline Net Annual Income & & & & \\ \hline Net Annual Cash Flow & & & & \\ \hline Project Life & & & & \\ \hline Depreciation Annual & & & & \\ \hline Accounting Rate of Return & & & & \\ \hline Payback period & & & & \\ \hline NPV & & & & \\ \hline Profitability index & & & & \\ \hline & & & & \\ \hline \end{tabular} Requirement 1: using separate tools and techniques, calculate the information and fill in the summary. Requirement 2. Which projects should rank first and why? \begin{tabular}{|l|l|l|l|l} \hline & & & & \\ \hline Equipment: Picture and Title: & & & & \\ \hline Initial Investment & & & & \\ \hline Net Annual Income & & & & \\ \hline Net Annual Cash Flow & & & & \\ \hline Project Life & & & & \\ \hline Depreciation Annual & & & & \\ \hline Accounting Rate of Return & & & & \\ \hline Payback period & & & & \\ \hline NPV & & & & \\ \hline Profitability index & & & & \\ \hline & & & & \\ \hline \end{tabular} Requirement 1: using separate tools and techniques, calculate the information and fill in the summary. Requirement 2. Which projects should rank first and why