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7. The Bolivar Nut Farm is considering the purchase of a new walnut shelling machine to replace human nut crushers. The farm currently pays four human nutcrackers $15,000 per year. The automated sheller has a first cost of $200,000. Annual end of the year maintenance for the machine will be $10,000 the first year and increase by $1,000 per year. The machine will cost $1,000 per year for operating cost. The machine will have a salvage value of $10,000 at the end of its five years of useful life. a. If the cost of money for the Bolivar Nut farm is 6%, determine the present worth value. b. Based on the present worth value should the machine be purchased? 8. A flood control project will have a first cost of $1.4 million with an annual maintenance cost of $40,000 and 10 years of life. Reduced flood damage is expected to amount to $175,000 per year. Lost income to farmers is estimated to be $25,000 per year. At an interest rate of 6% per year, should the project be undertaken? 9. Compare two alternatives using i = 10% Alternative X First cost, $ 320,000 M&O costs, $/year 45,000 Benefits, $/year 110,000 Disbenefits, $/year 20,000 10 Alternative Y 540,000 35,000 150,000 45,000 20 Life, years a) Which alternative should be selected? b) Calculate the option based on incremental value and justify

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