Fiance Week 5

FI515_Homework5_ 10.8 Edelman Engineering is considering including two pieces of equipment, a hand motorhand truck and an smasher block system, in this years capital bud personate. 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, ar as follows: [pic] Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/ scorn 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: gossipmonger the sequester cash flows into the cash flow register, input I = 14, and then crystallise for NPV = $409. Financial calculator: excitant the arrogate cash flows into the cash flow register and then earn 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: stimulant the abstract cash flows into the cash flow register, input I = 14, and then crystallise 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 work on , the f irm go forth choose only one. The are mutu! ally exclusive investments. The electric powered truck go forth 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 metre 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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