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. |
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
Cullumber Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive,...
Cullumber Incorporated management is considering investing in
two alternative production systems. The systems are mutually
exclusive, and the cost of the new equipment and the resulting cash
flows are shown in the accompanying table. The firm uses a 9
percent discount rate for their production systems.
Year
System 1
System 2
0
-$15,100
-$42,300
1
15,100
30,800
2
15,100
30,800
3
15,100
30,800
What are the payback periods for production systems 1 and 2?
(Round answers to 2 decimal places,...
Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent....
Crane Corp. management is evaluating two mutually exclusive
projects. The cost of capital is 15 percent. Costs and cash flows
for each project are given in the following table.
Year
Project 1
Project 2
0
-$1,292,224
-$1,321,796
1
238,000
384,000
2
329,000
384,000
3
430,000
384,000
4
504,000
384,000
5
800,000
384,000
Calculate NPV and IRR of two projects. (Enter negative
amounts using negative sign, e.g. -45.25. Do not round discount
factors. Round other intermediate calculations and final answer to...
Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent....
Crane Corp. management is evaluating two mutually exclusive
projects. The cost of capital is 15 percent. Costs and cash flows
for each project are given in the following table.
Year
Project 1
Project 2
0
-$1,304,168
-$1,325,262
1
264,000
379,000
2
365,000
379,000
3
445,000
379,000
4
539,000
379,000
5
739,000
379,000
Calculate NPV and IRR of two projects. (Enter negative
amounts using negative sign, e.g. -45.25. Do not round discount
factors. Round other intermediate calculations and final answer to...
Cullumber Crafts Corp. management is evaluating two independent capital projects that will each cost the company...
Cullumber Crafts Corp. management is evaluating two independent
capital projects that will each cost the company $290,000. The two
projects will provide the following cash flows: Year Project A
Project B 1 $84,750 $66,000 2 103,450 99,000 3 24,235 137,250 4
129,655 98,110 Collapse question part (a1) What is the payback
period of both projects? (Round answers to 2 decimal places, e.g.
15.25.)
Ivanhoe Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive,...
Ivanhoe Incorporated management is considering investing in two
alternative production systems. The systems are mutually exclusive,
and the cost of the new equipment and the resulting cash flows are
shown in the accompanying table. The firm uses a 8 percent discount
rate for production systems.
Year
System
1
System
2
0
-$12,490
-$44,703
1
12,536
30,270
2
12,536
30,270
3
12,536
30,270
Compute the IRR for both production system 1 and production system
2. (Do not round intermediate calculations. Round...
Emporia Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given...
Emporia Mills management is evaluating two alternative heating
systems. Costs and projected energy savings are given in the
following table. The firm uses 12.27 percent to discount such
project cash flows.
Year
System
100
System
200
0
$-2,053,200
$-1,741,800
1
314,410
701,900
2
520,830
460,300
3
529,940
614,300
4
656,200
314,000
What is the NPV of the systems? (Enter negative amounts
using negative sign e.g. -45.25. Do not round discount factors.
Round answers to 0 decimal places, e.g.
5,275.)
NPV...
Cullumber Company is considering buying a new farm that it plans to operate for 10 years....
Cullumber Company is considering buying a new farm that it plans
to operate for 10 years. The farm will require an initial
investment of $12.05 million. This investment will consist of $2.20
million for land and $9.85 million for trucks and other equipment.
The land, all trucks, and all other equipment are expected to be
sold at the end of 10 years for a price of $5.15 million, which is
$2.50 million above book value. The farm is expected to...
Cullumber Company is about to issue $336,000 of 9-year bonds paying an 11% interest rate, with...
Cullumber Company is about to issue $336,000 of 9-year bonds
paying an 11% interest rate, with interest payable annually. The
discount rate for such securities is 10%.
Click here to view the factor table.
(For calculation purposes, use 5 decimal places as
displayed in the factor table provided.)
How much can Cullumber expect to receive for the sale of these
bonds? (Round answer to 0 decimal places, e.g.
2,575.)
Cullumber can expect to receive
$enter a dollar amount to be...
Blossom Corp. management is investigating two computer systems. The Alpha 8300 costs $3,324,225 and will generate...
Blossom Corp. management is investigating two computer systems.
The Alpha 8300 costs $3,324,225 and will generate cost savings of
$1,213,225 in each of the next five years. The Beta 2100 system
costs $4,000,500 and will produce cost savings of $1,115,750 in the
first three years and then $2 million for the next two years. The
company’s discount rate for similar projects is 14 percent.
What is the NPV of each system? (Enter negative amounts
using negative sign, e.g. -45.25. Do...
Wildhorse Industries management is planning to replace some existing machinery in its plant. The cost of...
Wildhorse Industries management is planning to replace some
existing machinery in its plant. The cost of the new equipment and
the resulting cash flows are shown in the accompanying table. The
firm uses an 18 percent discount rate for projects like this.
Should management go ahead with the project?
Year
Cash Flow
0
-$3,485,400
1
871,710
2
896,700
3
1,104,400
4
1,340,360
5
1,450,600
What is the NPV of this project? (Enter negative
amounts using negative sign e.g. -45.25. Do...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 1 minute ago
asked 3 minutes ago
asked 14 minutes ago
asked 16 minutes ago
asked 22 minutes ago
asked 26 minutes ago
asked 30 minutes ago
asked 54 minutes ago
asked 59 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago