Net Present Value-Unequal Lives Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $710,000. The net cash flows estimated for the two proposals are as follows: Year Net Cash Flow Diamond Core Drill Net Cash Flow Hydraulic Excavator 1 $317,000 $341,000 23 4569 7 8 256,000 317,000 256,000 312,000 257,000 319,000 170,000 138,000 147,000 147,000 The estimated residual value of the diamond core drill at the end of Year 4 is $280,000. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 12%. If required, round to the nearest dollar. Diamond Core Drill Net present value 592,850 X $ tA Hydraulic Excavator 271,980 V
Net Present Value-Unequal Lives Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $710,000. The net cash flows estimated for the two proposals are as follows: Year Net Cash Flow Diamond Core Drill Net Cash Flow Hydraulic Excavator 1 $317,000 $341,000 23 4569 7 8 256,000 317,000 256,000 312,000 257,000 319,000 170,000 138,000 147,000 147,000 The estimated residual value of the diamond core drill at the end of Year 4 is $280,000. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 12%. If required, round to the nearest dollar. Diamond Core Drill Net present value 592,850 X $ tA Hydraulic Excavator 271,980 V
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 21E: Net present value-unequal lives Bunker Hill Mining Company has two competing proposals: a processing...
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![Net Present Value-Unequal Lives
Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $710,000.
The net cash flows estimated for the two proposals are as follows:
Year
Net Cash Flow
Diamond Core Drill
Net Cash Flow
Hydraulic Excavator
1
$317,000
$341,000
23 4569
7
8
256,000
317,000
256,000
312,000
257,000
319,000
170,000
138,000
147,000
147,000
The estimated residual value of the diamond core drill at the end of Year 4 is $280,000.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
X
Open spreadsheet
Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 12%. If required,
round to the nearest dollar.
Diamond Core Drill
Net present value
592,850 X
$
tA
Hydraulic Excavator
271,980 V](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd5cec4cf-95e8-47ea-980e-6ad8b1e8ac5c%2Fbe1aea11-2b03-4741-8164-5bca5ed967e3%2Faq45o78_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Net Present Value-Unequal Lives
Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $710,000.
The net cash flows estimated for the two proposals are as follows:
Year
Net Cash Flow
Diamond Core Drill
Net Cash Flow
Hydraulic Excavator
1
$317,000
$341,000
23 4569
7
8
256,000
317,000
256,000
312,000
257,000
319,000
170,000
138,000
147,000
147,000
The estimated residual value of the diamond core drill at the end of Year 4 is $280,000.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
X
Open spreadsheet
Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 12%. If required,
round to the nearest dollar.
Diamond Core Drill
Net present value
592,850 X
$
tA
Hydraulic Excavator
271,980 V
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