The following infon'nation is available to use in deciding whether to purchase the new backhoes: Old Backhoes New Backhoes Purchase cost when new $90,000 $200,000 Salvage value now $42,000 Investment in major overhaul needed in next year 355,000 Salvage value in 8 years $15,000 $90,000 Remaining life 8 years 8 years Net cash ow generated each year $30,425 $43,900 Instructions 1, Evaluate, discuss, and compare whether to purchase the new equipment or overhaul the old equipment, (Hint' For the old mad'line, the initial investment is the cost of the overhaul For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.) I Calculate the net present value of the old backhm and the new backhoes. - Discuss the net present value ofeach, including what the calculations reveal about whether the company should purchase the new backhoes or continue using the old hackhoes. - Calculate the payback period for keeping the old backhoes and purchasing the new backhoes. (Hint: For the old machines, evaluate the payback oi an overhaul.)