Harper Ferry Company provides a ferry service across the Mississippi River. One of its ferryboats is in poor condition. This ferry can be renovated at an immediate cost of $20,000+$1000 X Last two digit of your roll no. Further repairs and an overhaul of the motor will be needed five years from now at a cost of $8,000. In all, the ferry will be usable for 10 years if this work is done. At the end of 10 years, the ferry will have to be scrapped at a salvage value of approximately $6,000. The scrap value of the ferry right now is $7,000. It will cost $30,000 each year to operate the ferry, and revenues will total $40,000 annually.

As an alternative, Harper Ferry Company can purchase a new ferryboat at a cost of $36,000+ $1000 X Last two digit of your roll no. The new ferry will have a life of 10 years, but it will require some repairs at the end of 5 years. It is estimated that these repairs will amount to $3,000. At the end of 10 years, it is estimated that the ferry will have a scrap value of $6,000. It will cost $21,000 each year to operate the ferry, and revenues will total $40,000 annually.

Harper Ferry Company requires a return of at least 15% before taxes on all investment projects.

Should the company purchase the new ferry or renovate the old ferry? Which economic criteria would you select to determine the most profitable course of action? Write specific reasons for your selection. (Last Two digit of my Roll is 24)