Fiance Week 5

FI515_Homework5_ 10.8 Edelman Engineering is considering including two pieces of equipment, a hand motor truck and an viewgraph block system, in this years capital bud pay off. The projects atomic number 18 independent. The bills outlay for the truck is $17,100, and that for the pulley system is $22,430. The firms cost of capital is 14 percent. After-tax cash flows, including depreciation, atomic number 18 as follows: [pic] Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/ resist decision for each. SOLUTION: Truck: NPV = -$17,100 + $5,100(PVIFA14%,5) = -$17,100 + $5,100(3.4331) = -$17,100 + $17,509 = $409. (Accept) Financial calculator: chin-wagging the sequester cash flows into the cash flow register, input I = 14, and then crystallise for NPV = $409. Financial calculator: excitant the assign cash flows into the cash flow register and then assoil for IRR = 14.99% ? 15%. MIRR: PV Costs = $17,100. [pic] Pulley: NPV = -$22,430 + $7,500(3.4331) = -$22,430 + $25,748 = $3,318. (Accept) Financial calculator: arousal the set aside cash flows into the cash flow register, input I = 14, and then turn for NPV = $3,318.

Financial calculator: Input the appropriate cash flows into the cash flow register and then solve for IRR = 20%. MIRR: PV Costs = $22,430. [pic] 10.9 Davis Industries must choose between a gas powered and a electric powered forklift truck for moving materials in i ts factory. Since both forklifts perform the! same go , the firm go forth choose only one. The are mutually exclusive investments. The electric powered truck allow for cost more but it will be slight pricy to operate. It will cost 22000 whereas the gas powered truck will cost 17500 .the cost of the capital applies to both investments is 12%. The feel for both types of truck is estimated to be 6 yeatrs during which succession the realise cash flows for the electric powered truck...If you want to get a full essay, order it on our website: BestEssayCheap.com

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