We need to purchase construction equipment. We have the choice of purchasing: Item A which has an initial cost of $85,000, an annual fuel cost of $ 5,000/year, annual maintenance cost of $2,000 at the end of the first year that increase thereafter by $200 per year and a salvage value of $12,000 at the end of its 8-year life, and Item B, which has an initial cost of $110,000, an annual fuel cost of $ 4,500/year, annual maintenance cost of $2,000 at the end of the first year that increase thereafter by 5 percent per year and a salvage value of $28,000 at the end of its 12-year life. The least common multiple of the useful lives of these alternatives is 24 years. Evaluate the alternatives using an interest rate of 12 percent, compounded annually. Express your answers to the nearest dollar. (a). 13 pt.) For the first 8-year cycle, what is the net present worth of Item A (S)? (b). 13 pt.) For the first 12-year cycle, what is the net present worth of Item B ($)? (c). Suppose that the present worth of Item A for one year life time is-S120.767 and that the present worth of Item B for one 12- year life time is $152,158 (these are not the correct answers to parts (a) and (b)). 1. 12pt) What is the present value of Project A for the planning horizon ($)? 2. 12pt) What is the present value of Project B for the planning horizon (5)? 3. (1pt) Which project is preferred (A or B)? Page 2