E calls for the purchase of earthmoving equipment

Reference no: EM131076040

I need help with a Financing problem. I have a test tomorrow and need to show my work on how I solved the problem.

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

Project E ($20,000 Investment)Year Cash Flow1....................$50002.....................60003.....................70004.....................10,000
Project H ($20,000 InvestmentYear Cash Flow1....................$16,0002......................50003......................4000

a) Determine the net present value of the projects based on a 0% discount rate
b) Determine the net present value of the projects based on a 9% discount rate.
c) The internal rate of return on Project E is 13.25%, and the internal rate of return on Project H is 16.30%.
d) If the two projects are not mutually exclusive, what would your acceptance or rejection decision be if the cost of capital (discount rate) is 8%? (Use the net present value profile no actual numbers are necessary)
e) If the two projects are mutually exclusive, what would be your decision if the cost of capital is 6%, 13%, and 18%? (use net present value profile for your answer.

Reference no: EM131076040

Questions Cloud

Write a pseudo code program for shifting data : write a pseudo code program for shifting data to make a gap at some specified location of a sorted fi le. Pay particular attention to the details of shifting the last item out of one block and into the first position of the next block.

Calculation of their respective roa and roe : Show your calculation of their respective ROA and ROE; footnote which financial statement the numbers are picked from. For example, assets (balance sheet).

Design post to elicit multiple point of view from colleagues : Design your posts to elicit multiple points of view from your colleagues. Validate your assertions with references to credible sources.

What data structure is appropriate to support operations : What data structure is appropriate to support these operations? You may assume that you can distinguish slots of a block that do not contain a record from those that do. You can make this distinction either by having a convention for null values w..

E calls for the purchase of earthmoving equipment : Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a new present value profile in comparing the projects. ..

Price-taking firm has a short run cost function : A price-taking firm has a short run cost function SC(q) = 3q^2 + 18q + 600. Calculate the profit for this firm if the price is P = 72. Using either an integral or geometry, calculate the producer surplus for the firm at P = 72. Explain how the Produc..

Economy-net taxes and government spending : Suppose that in an economy, net taxes and governemnt spending are independent of income. It is determined that when government spending falls by $200 billion income falls by $800 billion. What is the MPS? What is the MPC?

Equals the nominal rate minus the inflation rate : The Fisher equation tells us that the real interest rate approximately equals the nominal rate minus the inflation rate. Suppose the inflation rate increases from 3% to 5%.

Review of literature and incorporating theory : SIGNIFICANSE OF DAILY INTERRUPTION IN SEDATED MECHANICAL VENTILATOR PATIENTS - Review of Literature and Incorporating Theory

User Account

All Pages