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Problem 4 (25 pts). Granny Goose is trying to decide to buy one among three alternative tractors necessary to upgrade her farming business. Data concerning
Problem 4 (25 pts). Granny Goose is trying to decide to buy one among three alternative tractors necessary to upgrade her farming business. Data concerning the 3 tractor models, namely TORO, PEGASUS, and TAMARAW are shown. Which tractor should Granny Goose choose at a MARR of 7%? Initial Cost (Php) General Maintenance Cost in year 2 and year 4 (Php) Overhaul Cost in year 5 (Php) Annual Revenue Salvage Value (Php) at end-of-life (EOL) Useful Life (years) B/C Ratio TORO 45,000 31,000 0 70,000 12,000 8 3.53 PEGASUS 56,000 20,000 10,000 70,000 15,000 5 4.08 TAMARAW 24,000 35,000 5,000 70,000 0 6 3.93 Additional Guidelines: 1. Assume co-termination using the TAMARAW's useful life. Evaluate using the B/C Ratio. 2. Show incremental CFs spread-out over the study period. Problem 4 (25 pts). Granny Goose is trying to decide to buy one among three alternative tractors necessary to upgrade her farming business. Data concerning the 3 tractor models, namely TORO, PEGASUS, and TAMARAW are shown. Which tractor should Granny Goose choose at a MARR of 7%? Initial Cost (Php) General Maintenance Cost in year 2 and year 4 (Php) Overhaul Cost in year 5 (Php) Annual Revenue Salvage Value (Php) at end-of-life (EOL) Useful Life (years) B/C Ratio TORO 45,000 31,000 0 70,000 12,000 8 3.53 PEGASUS 56,000 20,000 10,000 70,000 15,000 5 4.08 TAMARAW 24,000 35,000 5,000 70,000 0 6 3.93 Additional Guidelines: 1. Assume co-termination using the TAMARAW's useful life. Evaluate using the B/C Ratio. 2. Show incremental CFs spread-out over the study period
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