Please, do this on excel $.$ You are the engineer tasked with determining the best economic decision whether to

replace a Cat motor grader. A new motor grader has a life of $10$ years and cost $$1,550,000$

dollars. Annual operating costs are $$120,000$ per year, without regard to labor costs.

Your existing motor grader is $5$ years old, has no debt and has a current salvage value of

$$250,000.$ Annual operating costs without regard to labor are $$285,000$ per year for the first

$5$ years and the grader will then require a major overhaul costing $$475,000$ at the end of year

$5,$ then starting in year $6,$ annual operating costs are expected to drop to $$145,000$ per year for

its remaining useful life for the next $5($periods $6-10)$years$.$

Assuming that both machines have the same availability $(100\%),$ and without regard to taxes,

and salvage value is zero at the end of $10$ years for both machines;

Calculate the equivalent annual operating cost of both economic alternatives for the & year

period, assuming other opportunities exist that would earn a $7\mathrm{.}5\%$ annual minimum rate of return?

Remember costs are negative!

a$.(5$ pts$)$ What is the equivalent annual operating cost of the NEW Grader? $($don$\text{'}$t forget to net the

salvage value of selling the Existing Grader in period $0$ against the purchase price$)$

b$.(5$ pts$)$ What is the equivalent annual operating cost of the Existing Grader?

c$.(5$ pts$)$ Which is the cheaper annual operating cost alternative NEW or EXISTING $?$

d$.(5$ pts$)$ Using Goal Seek$-$What if$,$ what must the minimum rate of return be which would make

these two alternatives equal? Calculate the ROR$\%$ to $2$ decimal places.

e$.(5$ pts$)$ If the availability for the Existing Grader is only $80\%$ for the first $5$ years until the major

overhaul is performed, does this change your answer to $a.$ above? What is the equivalent annual

cost of the Existing Grader at $80\%$ availability? $($Don$\text{'}$t forget to evaluate this at the minimum

ROR$=7\mathrm{.}5\%.)$