Based on the simple payback method, Deltas recovery period (to the nearest half or full year) is a) 2.5; b) 3.0; c) 3.5; d) 4.0.

2 of 5 An electric powerline company is pondering the replacement of an aging backhoes. The key parameters of the three backhoes under scrutiny are provided below. Parameters 1. Initial Cost Epsilon 375,000 Zeta 425,000 2. Revenues Delta 325,000 290,000 at EOY1 increasing by $2,000 annually thereafter 185,000 at 1 increasing by 3% annually thereafter 250,000 at EOY1 decreasing by $2,000 annually thereafter 215,000 at EOY1 increasing by $2,000 annually thereafter 3. Operating costs ($) 155,000 at EOY1 increasing by 2% annually thereafter EOY1-EOY8 = 150,000; EOY9-EOY16 = 175,000 60,000 7.000 4. End-of-life salvage value ($) 5. Useful life (years) 8 16 EOY = End-of-year Industry Standard 4 years MARR = 10%