**Net Present Value Methodâ€”Annuity**

Easton Excavation Company is planning an investment of $120,000 for a bulldozer. The bulldozer is expected to operate for 1,400 hours per year for five years. Customers will be charged $105 per hour for bulldozer work. The bulldozer operator costs $34 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $9,000. The bulldozer uses fuel that is expected to cost $38 per hour of bulldozer operation.

**a.** Determine the equal annual net cash flows from operating the bulldozer.

**b**. Determine the net present value of the investment, assuming that the desired rate of return is 10%. Use the table of present value of an annuity of $1 above. Round to the nearest dollar.

**c.** Should Easton invest in the bulldozer, based on this analysis?

**d. **Determine the number of operating hours such that the present value of cash flows equals the amount to be invested.