Gas-powered and an electric-powered forklift truck

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Reference no: EM131068885

Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $23,000, whereas the gas-powered truck will cost $17,100. The cost of capital that applies to both investments is 11%. The life for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,500 per year and those for the gas-powered truck will be $4,950 per year. Annual net cash flows include depreciation expenses. Calculate the NPV for each type of truck. Round your answers to the nearest dollar. Electric-powered truck $ ________ Gas-powered truck $ ________ Calculate the IRR for each type of truck. Round your answers to two decimal places. Electric-powered truck ________ % Gas-powered truck ________ % Which type of the truck should the firm purchase? _________________

Reference no: EM131068885

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Gas-powered and an electric-powered forklift truck : Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the firm will choose only one. Calculate the NPV for each type of truck.

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