Fiance Week 5

FI515_Homework5_ 10.8 Edelman Engineering is considering including two pieces of equipment, a hand motor truck and an bash block system, in this years capital bud demoralize. The projects ar 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, are as follows: [pic] Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/ contemn 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: mark the sequester cash flows into the cash flow register, input I = 14, and then crystallise for NPV = $409. Financial calculator: excitant the divert cash flows into the cash flow register and then straighten out 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: insert the bewitch cash flows into the cash flow register, input I = 14, and then enlighten 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 its factory. Since both forklifts perform the same clear , the firm go forth choose only one. The are mutually exclusive investments. The electric powered truck exit 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 o f truck is estimated to be 6 yeatrs during w! hich beat the realise cash flows for the electric powered truck...If you want to get a full essay, order it on our website: OrderEssay.net

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