Question: a waste disposal company is considering the replacement of one...
Question details
A waste disposal company is considering the replacement of one of its aging trucks. The key parameters of the three trucks under scrutiny are provided below. 

Parameters 
Delta 
Epsilon 
Zeta 
1. Initial Cost ($) 
250,000 
375,000 
450,000 
2. Revenues ($) 
230,000 at EOY1 increasing by 2.5% annually thereafter 
195,000 at EOY1 increasing by 3,000 annually thereafter 
235,000 at EOY1 decreasing by 1% annually thereafter 
3. Operating costs ($) 
140,000 at EOY1 decreasing by 2,000 annually thereafter 
125,000 at EOY1 decreasing by 2% annually thereafter 
EOY1EOY4 = 125,000; EOY5EOY8 = 135,000 EOY9EOY12 = 170,000 EOY13EOY16 = 190,000 
4. Endoflife salvage value ($) 
20,000 
7,000 
20,000 
5. Useful life (years) 
4 
8 
16 

 17. The incremental B/C ratio (second decimal; no rounding) between the Epsilon and Zeta trucks is
a) 0.98; b) 1.05; c) 1.07; d) 1.11.
 18. Delta’s Internal Rate of
Return (IRR) (first decimal; no rounding) is
a) 18.1%; b) 19.8%; c) 20.8%; d) 21.1%.  19. Epsilon’s Internal Rate of
Return (IRR) (first decimal; no rounding) is
a) 16.0%; b) 16.8%; c) 17.0%; d) 17.3%.  20. The incremental Internal Rate
of Return (ΔIRR) between the Delta and Zeta trucks (first decimal;
no rounding) is
a) 13.6%; b) 14.5%; c) 15.1%; d) 15.9%.
Hint: Delta's NFW = $81,900
Epsilon's NPW = $89,000
Zeta's NFW = $709,100