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 

 25. The incremental External Rate of Return (ΔERR) between the Epsilon and Zeta trucks (first decimal; no rounding) is
a) 10.4%; b) 10.6%; c) 10.8%; d) 11.3%.
 26. From your calculations, the
best truck based on the external rate of return (ERR) method
is
a) Delta; b) Epsilon; c) Zeta.
 27. If the company’s truck budget
is $850,000, which truck(s) should it purchase assuming that trucks
are independent investments?
a) Zeta only; b) Delta and Epsilon; c) Delta and Zeta; d) Epsilon and Zeta.
 28. Donald plans to make $200 bank deposits at the end of every other month in 2019 (i.e., end of February, end of April, end of June … end of December).
What is the equivalent monthly (end of each month of12 months) deposit if the interest rate is 12% compounded monthly?
a)
200(A/F,12%/12,2)
b) 200/2
c) 200(A/P,12%/12,2)
d) 200(6)(A/F,12%,12)
Hint: Delta's NFW = $81,900
Epsilon's NPW = $89,000
Zeta's NFW = $709,100