1 Net Present Value - Unequal uves Bunker Hill Mining Company has two competing proposats a processing till and an electric shavel. Both pieces of equipment have an initiat investment of $674,177. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Year Processing Mill Electric Shovel $230,000 $288,000 205,000 267,000 205,000 246,000 163,000 253,000 124,000 104,000 90,000 2 8 90,000 The estimated residual value of the processing mill at the end of Year 4 is $290,000 Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% Year 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.254 0.194 10 0.558 0.386 0.322 0.247 0.162 Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 154. Use the present value table appearing above Processing Mill Electric Shovel Present value of net cash flow total Less amount to be invested Net present value Which project should be favored