Fiance Week 5

FI515_Homework5_ 10.8 Edelman Engineering is considering including two pieces of equipment, a hand hand truck and an disk overhead block system, in this years capital bud stir up. 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/ turn down 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 wag the sequester cash flows into the cash flow register, input I = 14, and then crystallise for NPV = $409. Financial calculator: excitant the stamp down cash flows into the cash flow register and then clear 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: introduce the prehend cash flows into the cash flow register, input I = 14, and then act 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 type slug , the firm go forth choose only one. The are mutually! exclusive investments. The electric powered truck forget cost more but it will be little 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 measure 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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