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I need help with the following E & T Excavation Company is planning an investment of $402,000 for a bulldozer. The bulldozer is expected to
I need help with the following
E & T Excavation Company is planning an investment of $402,000 for a bulldozer. The bulldozer is expected to operate for 2,000 hours per year for five years. Customers will be charged $145 per hour for bulldozer work. The bulldozer operator costs $28 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $20,000. The bulldozer uses fuel that is expected to cost $37 per hour of bulldozer operation Present Value of an Annuit of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.833 1 0.943 0.909 0.893 0.870 1.833 2 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3,465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 5.582 4.564 7 4.868 4.160 3.605 6.210 5.335 4.968 4.487 3.837 4.031 6.802 5.759 5.328 4.772 10 7.360 6.145 5.650 5.019 4.192 a. Determine the equal annual net cash flows from operating the bulldozer E and T Excavation Company Equal Annual Net Cash Flow Cash inflows: Hours of operation Revenue per hour X S Revenue per year Cash outflows: Hours of operation Fuel cost per hour Labor cost per hour Total fuel and labor costs per hour X S Fuel and labor costs per year Maintenance costs per year a. Determine the equal annual net cash flows from operating the bulldozer. E and T Excavation Company Equal Annual Net Cash Flow Cash inflows: Hours of operation Revenue per hour Revenue per year v X S Cash outflows: Hours of operation Fuel cost per hour Labor cost per hour Total fuel and labor costs per hour Fuel and labor costs per year Maintenance costs per year X S Annual net cash flow b. Determine the net present value of the investment, assuming that the desired rate of return is 20%. 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. Present value of annual net cash flows Less amount to be invested Net present value c. Should E & T invest in the bulldozer, based on this analysis? Yes d. 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 the nearest whole number. hoursStep by Step Solution
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