A business is considering 2 new investments. Project E is a purchase of equipmen

Question

A business is considering 2 new investments. Project E is a purchase of equipment. Project H an investment with a lift. Use Appendix B.

Project E                            Project H

($25,000 investment)           ($27,000 investment)

Year                                    Year

1. 6000                                 1. 18000

2. 9000                                  2. 9000

3. 10000                                3. 7000

4. 13000                                      -

Determine the NPV based on 0% discount rate for Project E?       Project H?

Determine the NPV based on 9% discount rate for Project E?        Project H?

Explanation / Answer

year E F 0 -25000 -27000 1 6000 18000 2 9000 9000 3 10000 7000 4 13000 NPV 13000 2494.165768

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