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Calculate the npv for project

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Question:

Hunt Inc. intends to invest in one of two competing types of computer-aided manufacturing equipment. CAM X and CAM Y. Both CAM X and CAM Y models have a project life of 10 years. The purchase price of the CAM X model is P3,600,000 and it has a net annual after-tax cash inflow of P900,000. The CAM Y model is more expensive, selling for P4,200,000, but it will produce a net annual after-tax cash inflow of P1,050,000. The cost of capital for the company is 10%.

Required: (Show solutions and brief explanation)

1. Calculate the NPV for each project. Which model would you recommend?

Reference no: EM133266921

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