Please help solve. a. Determine the equal annual net cash flows from operating the bulldozer.Jones Excavation CompanyEqual Annual Net Cash FlowsCash inflows:Hours of operationRevenue per hourRevenue per yearCash outflows:Hours of operationFuel cost per hourLabor cost per hourTotal fuel and labor costs per hourFuel and labor costs per yearMaintenance costs per yearAnnual net cash flowsb. Determine the net present value of the investment, assuming that the desired rate of return6%. 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.Present value of annual net cash flowsAmount to be investedNet present valuec. Should Jones invest in the bulldozer, based on this analysis?because the bulldozer cost is less thanYesthe present value of the cash flows at the minimum desired rate of return of 6%.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.hours Jones Excavation Company is planning an investment of $215,100 for a bulldozer. The bulldozer is expected to operate for 1,000 hours per year for seven years. Customers will be charged $125 per hour for bulldozer work. The bulldozer operator costs $32 per hour in wagesand benefits. The bulldozer is expected to require annual maintenance costing $10,000. The bulldozer uses fuel that is expected to cost $42 per hour of bulldozer operation.Present Value of an Annuity of $1 at Compound InterestYear6%10%12%15%20%10.9430.9090.8930.8700.83321.8331.7361.6901.6261.52832.6732.4872.4022.2832.10643.4653.1703.0372.8552.58954.2123.7913.6053.3532.99164.9174.3554.1113.7853.32675.5824.8684.5644.1603.6056.2105.3354.9684.4873.8376.8025.7595.3284.7724.031107.3606.1455.6505.0194.192a. Determine the equal annual net cash flows from operating the bulldozer.Jones Excavation CompanyEqual Annual Net Cash FlowsCash inflows:Hours of operationRevenue per hourRevenue per yearCash outflows:Hours of operationFuel cost per hourLabor cost per hourTotal fuel and labor costs per hour

Net present value method discounts all cash inflows with the required rate of return and then…

a. Determine the equal annual net cash flows from operating the bulldozer. Jones Excavation Company Equal Annual Net Cash Flows Cash inflows: Hours of operation Revenue per hour Revenue per year Cash outflows: Hours of operation Fuel cost per hour Labor cost per hour Total fuel and labor costs per hour Fuel and labor costs per year Maintenance costs per year Annual net cash flows b. Determine the net present value of the investment, assuming that the desired rate of returm is 6%. 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. Present value of annual net cash flows Amount to be invested Net present value c. Should Jones invest in the bulldozer, based on this analysis? ,because the bulldozer cost Yes less than the present value of the cash flows at the minimum desired rate of return of 6%. 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. hours

a. Determine the equal annual net cash flows from operating the bulldozer. Jones Excavation Company Equal Annual Net Cash Flows Cash inflows: Hours of operation Revenue per hour Revenue per year Cash outflows: Hours of operation Fuel cost per hour Labor cost per hour Total fuel and labor costs per hour Fuel and labor costs per year Maintenance costs per year Annual net cash flows b. Determine the net present value of the investment, assuming that the desired rate of returm is 6%. 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. Present value of annual net cash flows Amount to be invested Net present value c. Should Jones invest in the bulldozer, based on this analysis? ,because the bulldozer cost Yes less than the present value of the cash flows at the minimum desired rate of return of 6%. 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. hours

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 14P

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