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You have asked a question with some 6 sub parts. I have addressed the first four sub parts. Please post the balance sub parts as a separate question.
Please see the table below. Please be guided by the second row to understand the mathematics. The last two rows highlighted in yellow contain your answers for part (a) and part (b).
Subsequent parts have been answered after the table. Figures in parenthesis, if any, mean negative values. All financials are in $. Adjacent cells in blue contain the formula in excel I have used to get the final output.
Part (c) Look at the last column. Cumulative cash flows turn positive between year 3 and 4.
Hence, payback period = 3 + 7,400 / 8,600 = 3.86 years
Part (d)
EAC = Annual maintenance cost + equivalent annual cost of the initial investment = 1,200 + PMT (Rate, Nper, PV) = 1,200 + PMT (6%, 20, -29000) = 1,200 + $2,528.35 = $ 3,728.35
E н Purchase cash flows Maintenance Price per gallon c Cumulative cash flows Net cash flows Savings Year 84 cash flows D Cx 2800 E = A + B + D (29,000) A B (29,000) Cumulative of E (29,000) 85 86 (1,200) 5,800 (23,200) 1 2.50 7,000 87 (16,000) (7,400) 2. (1,200) 8,400 3.00 7,200 88 (1,200) 9,800 8,600 3.50 89 (1,200) 3.50 9,800 4 8,600 1,200 90 (1,200 9,800 8,600 9,800 3.50 91 (1,200) 3.50 8,600 6 9,800 18,400 92 (1,200) 3.50 7 9,800 8,600 27,000 93 (1,200) 3.50 35,600 8 9,800 8,600 94 (1,200) 3.50 44,200 9 9,800 8,600 95 (1,200) 3.50 9,800 52,800 10 8,600 96 (1,200) 3.50 61,400 11 9,800 8,600 97 (1,200) 3.50 9,800 70,000 12 8,600 98 (1,200) 3.50 9,800 8,600 78,600 13 99 (1,200) 9,800 8,600 87,200 14 3.50 100 (1,200) 9,800 8,600 15 3.50 95,800 101 (1,200) 8,600 16 3.50 9,800 104,400 102 (1,200) 3.50 8,600 113,000 17 9,800 103 (1,200) 3.50 18 9,800 8,600 121,600 104 (1,200) 3.50 8,600 19 9,800 130,200 105 20 (1,200) 3.50 8,600 138,800 9,800 106 107 65,754NPV(6%,187:1106)+J86 108 Part (a) NPV 26.56% IRR(J86:J 106) IRR 109 Part (b) m n LO
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