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Net Cash Flow Year Processing Mill Electric Shovel 1 $310,000 $330,000 2   260,000   325,000 3   260,000   325,000 4   260,000   320,000 5   180,000   6   130,000   7   120,000   8   120,000   The estimated residual value of the processing mill at the end of Year 4 is $280,000. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 15%. Use the present value table appearing above. If required, round to the nearest dollar.   Processing Mill Electric Shovel Present value of net cash flow total $fill in the blank 1 $fill in the blank 2 Less amount to be invested fill in the blank 3 fill in the blank 4 Net present value $fill in the blank 5 $fill in the blank 6 Which project should be favored?         Check My Work

Net Cash Flow Year Processing Mill Electric Shovel 1 $310,000 $330,000 2   260,000   325,000 3   260,000   325,000 4   260,000   320,000 5   180,000   6   130,000   7   120,000   8   120,000   The estimated residual value of the processing mill at the end of Year 4 is $280,000. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 15%. Use the present value table appearing above. If required, round to the nearest dollar.   Processing Mill Electric Shovel Present value of net cash flow total $fill in the blank 1 $fill in the blank 2 Less amount to be invested fill in the blank 3 fill in the blank 4 Net present value $fill in the blank 5 $fill in the blank 6 Which project should be favored?         Check My Work

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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  1. Net Cash Flow
    Year Processing Mill Electric Shovel
    1 $310,000 $330,000
    2   260,000   325,000
    3   260,000   325,000
    4   260,000   320,000
    5   180,000  
    6   130,000  
    7   120,000  
    8   120,000  

    The estimated residual value of the processing mill at the end of Year 4 is $280,000.

    Present Value of $1 at Compound Interest
    Year 6% 10% 12% 15% 20%
    1 0.943 0.909 0.893 0.870 0.833
    2 0.890 0.826 0.797 0.756 0.694
    3 0.840 0.751 0.712 0.658 0.579
    4 0.792 0.683 0.636 0.572 0.482
    5 0.747 0.621 0.567 0.497 0.402
    6 0.705 0.564 0.507 0.432 0.335
    7 0.665 0.513 0.452 0.376 0.279
    8 0.627 0.467 0.404 0.327 0.233
    9 0.592 0.424 0.361 0.284 0.194
    10 0.558 0.386 0.322 0.247 0.162

    Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 15%. Use the present value table appearing above. If required, round to the nearest dollar.

      Processing Mill Electric Shovel
    Present value of net cash flow total $fill in the blank 1 $fill in the blank 2
    Less amount to be invested fill in the blank 3 fill in the blank 4
    Net present value $fill in the blank 5 $fill in the blank 6

    Which project should be favored?

     
     
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