Question: Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment Project H represents an investment in a hydraulic lift.
Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Project E Project H ($20,000 Investment) ($20,000 investment) Year Cash Flow Year Cash Flow 1. $5,000 1 $16,000 2 6,000 2 5,000 3. 7.000 3 4,000 4 10,000 a. Determine the net present value of the projects based on a 9 percent discount rate [2 marks] b. Determine the internal rate of return of the projects [1 mark] C. If the two projects are not mutually exclusive, what would your acceptance or rejection decision be if the discount rate is 8 percent? [1 mark] If the two projects are mutually exclusive, what would be your decision if the discount rate is 14 percent? [1 mark] d
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