Net present value-unequal livesDakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $552,146. The net cash flows estimated for the two proposals are as folloNet Cash FlowNet Cash FlowHydraulic Excavator$210,000YearDiamond Core Drill1$168,0002150,000195,0003150,000180,0004119,000185,000591,000676,00066,00066,000The estimated residual value of the diamond core drill at the end of Year 4 is $210,000.Present Value of $1 at Compound InterestYear6%10%12%15%20%10.9430.9090.8930.8700.83320.8900.8260.7970.7560.69430.8400.7510.7120.6580.57940.7920.6830.6360.5720.48250.7470.6210.5670.4970.40260.7050.5640.5070.4320.33570.6650.5130.4520.3760.27980.6270.4670.4040.3270.23390.5920.424100.5580.3860.3610.3220.2840.1940.2470.162Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 10%. Use the present value table appearing above.Diamond Core Drill Hydraulic ExcavatorPresent value of net cash flow totalAmount to be investedNet present value

Present Value of Net Cash Flows Diamond Core DrillYearCash FlowPresent Value Factor (10%)Present…

Answered: Net present value-unequal lives Dakota…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Orpheum Productions in Nevada is considering three mutually exclusive alternatives for lighting enhancements to one of its recording studios. Each enhancement will increase revenues by attracting directors who prefer this lighting style. The cash flow details, in thousands of dollars, for these enhancements are shown in the chart below. MARR is 10%/year. Based on a future worth analysis, which alternative (if any) should be implemented?
Case Study 2. The Liberty Cbok is a bookstore with three locations near the BS University campus. The bookstore has a program to sell personal computers to incoming freshmen and other students at a significant discount. The bookstore just covers computer costs, with a very small profit margin remaining. Orders come in throughout the summer, many only a few weeks before school starts in the fall, and the computer suppliers has a lead time of at least 6 weeks for delivery. Thus, the bookstore must forecast computer demand to build up inventory to meet student demand in the fall. The bookstore has a warehouse near campus where it must store all computers because it has no storage space at its retail locations. The number of computers ordered has effect to the number of temporary warehouses needed and workers who must be hired for handling and PC installations assistance. To get the forecast of computer sales the manager gets the computer purchase program for 14 years. Computer sales have…
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