essionLocatoreassignmentue es Net Present Value-Unequal Lives Bunker Hill Mining

Question

essionLocatoreassignmentue es Net Present Value-Unequal Lives Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel Both pieces of equipment have an initial investment of $466,339. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Year Processing Mill Electric Shovel $159,000 142,000 142,000 113,000 86,000 72,000 62,000 62,000 $199,000 184,000 170,000 175,000 er The estimated residual value of the processing mill at the end of Year 4 is $200,000 Present Value of $1 at Compound Interest Year 69?10% 12% is% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.71 .658 0.579 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 Co Check My Work Previous Email Instructor Save and Exit Submit Assignment for Grading SAMSUNG

Explanation / Answer

Processing Mill Electric Shovel Amount PVF NPV Amount PVF NPV Year-1 $159,000 0.87 $138,330 $199,000 0.87 $173,130 Year-2 $142,000 0.756 $107,352 $184,000 0.756 $139,104 Year-3 $142,000 0.658 $93,436 $170,000 0.658 $111,860 Year-4 $113,000 0.572 $64,636 $175,000 0.572 $100,100 Residual value $200,000 0.497 $99,400 $0 Total Cash inflow $756,000 $503,154 $728,000 $524,194 Less; Initial Investment -$466,339 -$466,339 NPV $36,815 $57,855

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