Question: This is a two part question, please answer by hand Your company needs to purchase a new track hoe and has narrowed the selection to

This is a two part question, please answer by hand

  1. Your company needs to purchase a new track hoe and has narrowed the selection to two pieces of equipment. The first track hoe costs $100,000 and has an hourly operation cost of $31.00 and a $35,000 salvage value at the end of three years. The second track hoe costs $65,000 and has an hourly operation cost of $36.00 and no salvage value at the end of three years. The operator cost is $29.00 per hour. The revenue from either track hoe is $95.00 per hour. Using 1,200 billable hours per year and a MARR of 20%, calculate the NPV for both track hoes. Which track hoe should your company choose?
  2. Determine the incremental net present value for Problem 2. Which track hoe should your company choose?

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