Question: (Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $9,000,000


(Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $9,000,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $3,000,000 per year for each of the next 6 years. In year 6 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at $1.1 million. Thus, in year the investment cash inflow totals $4,100,000. Calculate the project's NPV using a discount rate of 10 percent. (Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: Year Project A Project B Cash Flow Cash Flow 0 $(102,000) $(102,000) 1 40,000 0 40,000 0 3 40,000 0 4 40,000 0 5 40,000 200,000 (Click on the icone in order to copy its contents into a spreadsheet.) If the appropriate discount rate on these projects is 9 percent, which would be chosen and why? 2 The NPV of Project A is $ 53586.05. (Round to the nearest cent.) The NPV of Project B is $(Round to the nearest cent.)
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