NPV Analysis

Question 2 (4 points) Dick Dickerson Construction, Inc. has asked you to help them select a new backhoe. You have a choice between a Caterpillar one, which costs $70,000 and will save the company $7,500 annually, and a John Deere one, which costs $80,000 and will save the company $9,000 annually. Both machines can be sold at 30% of their original cost after 8-years of useful life. Given the interest rate is 3%, using the NPV analysis todetermine which of the backhoe should be purchased