Tracy Multinational Inc. has to decide between a gas-powered and an electric-powered forklift. The company will buy

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Tracy Multinational Inc. has to decide between a gas-powered and an electric-powered forklift. The company will buy only one forklift. The gas-powered forklift costs $17,600 and has cash flows of $5,400 per year for 6 years. The electric-powered forklift will cost $22,100 and has cash flows of $6,190 per year for 6 years. The cost of capital is 10.57%.

Calculate the NPV and the IRR for each forklift. Which one should the company select? Why?

Calculate the profitability index for both. Which one should the company select? Why?

Related Book For answer-question

Corporate Finance A Focused Approach

ISBN: 978-1305637108

6th edition

Authors: Michael C. Ehrhardt, Eugene F. Brigham

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Posted Date: Dec 27, 2023 12:17 AM

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Tracy Multinational Inc. has to decide between a gas-powered and an electric-powered forklift. The company will buy

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NPV and IRR Calculations Gaspowered forklift Initial investment17600 Annual cash flow5400 Discount rate1057 Number of years6 NPV Calculation NPV Initi... View the full answer

Corporate Finance A Focused Approach

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