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Keller Construction is considering two new investments Project E calls for the purchase of earth moving equipment Project H represents an investment in a hydraulic lift Keller wishes to use a net

Keller Construction is considering two new investments. Project E calls for the purchase of earth moving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Use Appendix B.

 

Project E   Project H
($25,000 investment)   ($27,000 investment)
Year Cash flow   Year Cash flow
1   $ 6,000   1   $ 18,000
2   9,000   2   9,000
3   10,000   3   7,000
4   13,000        

 

(a)

Determine the net present value of the projects based on a zero discount rate. (Omit the "$" sign in your response.)

 

  Net present value
Project E $
Project H $

 

(b) Determine the net present value of the projects based on a 9 percent discount rate. (Round "PV Factors" to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

 

  Net present value
Project E $
Project H $

 

May 14 2020 View more View Less

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