Millennium Freight is evaluating the possibility of adding a new shipping route, which would require an

acquisition of a new delivery vehicle, with several models available. If accepted, the new route is

expected to be serviced for many years, and therefore an infinite life can be assumed for the analysis in

parts b$)$ and c$)$ below. Assume minimum attractive rate of return of $14\%.$ Pease include a written answer

with each part of the question.

a$)$ Calculate the present worth of the new route assuming the El Grande vehicle model is chosen.

The purchase price of the vehicle is $$250,000$; the vehicle will require annual maintenance and

operating costs of $$12,000$; it is expected to be sold for $$70,000$ in $10$ years. The new route is

expected to result in additional annual net revenues of $$62,000.$ Calculate the present worth of

the new route for the $10-$year period of one cycle. Explain whether the new route should be

accepted or rejected and why.

b$)$ Assume the management ultimately decides to consider two vehicle models for the new route,

the El Grande from part a$),$ and Bandito. Assume the vehicle model choice has no impact on

revenues $($ignore revenues, and only compare costs and the salvage values$).$ The Bandito model

purchase price is $$350,000,$ its annual maintenance and operating costs are $$9,000,$ and it is

expected to be used for $15$ years, and then sold for $$100,000.$ Assuming whichever model is

chosen, the vehicle will be replaced with the same model $($same cash flows$)$ when sold, use the

Least Common Multiple method in conjunction with the Present Worth method to determine

which of the two models should be chosen. Explain your answer.

c$)$ Repeat part b$),$ except this time, use the Annual Worth method, instead of the Least Common

Multiple $$ Present Worth method. Explain your answer again. DO this in Exel