Jones Excavation Company is planning an investment of $143,200 for a bulldozer. The bulldozer is expected to operate for 1,000 hours per year for 6 years. Customers will be charged $130 per hour for bulldozer work. The bulldozer operator costs $34 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $10,000. The bulldozer uses fuel that is expected to cost $45 per hour of bulldozer operation.

Year	6%	10%	12%	15%	20%
1	0.943	0.909	0.893	0.870	0.833
2	1.833	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
5	4.212	3.791	3.605	3.353	2.991
6	4.917	4.355	4.111	3.785	3.326
7	5.582	4.868	4.564	4.160	3.605
8	6.210	5.335	4.968	4.487	3.837
9	6.802	5.759	5.328	4.772	4.031
10	7.360	6.145	5.650	5.019	4.192

Question Content Area

a. Determine the equal annual net cash flows from operating the bulldozer.

Line Item Description	Amount	Amount	Amount
Cash inflows:
Fuel and labor costs per yearFuel cost per hourHours of operationMaintenance costs per yearTotal fuel and labor costs per hour		- Select -
Annual net cash flowsFuel and labor costs per yearFuel cost per hourLabor cost per hourRevenue per hour		$- Select -
Annual net cash flowsFuel and labor costs per yearFuel cost per hourLabor cost per hourRevenue per year			$- Select -
Cash outflows:
Annual net cash flowsFuel and labor costs per yearHours of operationMaintenance costs per yearTotal fuel and labor costs per hour		- Select -
Annual net cash flowsFuel cost per hourMaintenance costs per yearRevenue per hourRevenue per year	$- Select -
Annual net cash flowsLabor cost per hourMaintenance costs per yearRevenue per hourRevenue per year	- Select -
Annual net cash flowsMaintenance costs per yearRevenue per hourRevenue per yearTotal fuel and labor costs per hour		$- Select -
Annual net cash flowsFuel and labor costs per yearHours of operationRevenue per hourRevenue per year			- Select -
Annual net cash flowsHours of operationMaintenance costs per yearRevenue per hourRevenue per year			- Select -
Annual net cash flowsFuel cost per hourHours of operationRevenue per hourRevenue per year			$- Select -

Question Content Area

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.

Line Item Description	Amount
Present value of annual net cash flows	fill in the blank 1 of 4$
Amount to be invested	fill in the blank 2 of 4
Net present value	fill in the blank 3 of 4$

c. Should Jones invest in the bulldozer, based on this analysis?

YesNo

, because the bulldozer cost is

less thanmore than

the present value of the cash flows at the minimum desired rate of return of 20%.

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. fill in the blank 4 of 4 hours