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Section 1: Evaluation of Business and Engineering Assets (15 points) Old Grads Inc. is considering investing in a bus shuttle service to take cadets to New York City on the weekends. They plan to purchase new busses to begin their business. Two bus manufacturing companies have submitted long-term contracts (which is required indefinitely to sell busses to the Old Grads. Each company has agreed to an initial selling price as well as an annual cost for maintenance support. Company A's bus has a service life of four years (4 years) and runs on gasoline. Company B's bus has a service life of six years (6 years) and runs on natural gas. Assume that all costs remain the same over time, and the contract will be renewed indefinitely. The MARR is 8%, compounded annually. Company A bus Company B bus Bus service life 4 years 6 years Initial purchase price per bus $399,000 $650,000 Fuel cost per shuttle per bus $62 $46 1. If Old Grads Inc. expects to conduct 215 shuttles per year, identify the better option for the contract. Show all work. (10 points) 2. Given the initial purchase cost and annual fuel cost for each company's busses, how many bus shuttles would Old Grads Inc. need to sell each year in order for the owners to be indifferent betwee Company A's busses and Company B's busses? Show all calculations. (5 points)

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