Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 12%. 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?

Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $703,510. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Year Processing Mill $241,000 214,000 214,000 Electric Shovel $301,000 280,000 258,000 265,000 171,000 130,000 108,000 94,000 94,000 The estimated residual value of the processing mill at the end of Year 4 is $300,000. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 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 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162