Question
The Management of Cullumber Manufacturing Company is evaluating two forklift systems to use in its plant...
The Management of Cullumber Manufacturing Company is evaluating
two forklift systems to use in its plant that produces the towers
for a windmill power farm. The costs and the cash flows from these
systems are shown below. The company uses a 8 percent discount rate
for all projects.
| Year 0 | Year 1 | Year 2 | Year 3 | |||||
| Otis Forklifts | $-3,107,450 | $962,225 | $1,373,886 | $2,093,497 | ||||
| Craigmore Forklifts | $-4,139,410 | $860,236 | $1,775,225 | $2,885,110 |
| NPV | ||
| Otis forklift | $623,270 | |
| Craigmore Forklifts | $469,367 |
Compute the IRR for each of the two systems. (Round
intermediate calculation to 0 decimal places, e.g. 1,525 and final
answers to 2 decimal places, e.g. 15.10%.)
| IRR | ||
| Otis forklift | % | |
| Craigmore Forklifts | % |
Is the investment decision different from the one determined by
NPV?
| The investment decision is
differentsame from the one determined by NPV. |
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