Net present value-unequal lives Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $909,244. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Net Cash Flow Hydraulic Excavator $346,000 Year Diamond Core Drill 1 $277,000 2 247,000 321,000 3 247,000 296,000 4 197,000 305,000 5 150,000 6 125,000 7 108,000 8 108,000 The estimated residual value of the diamond core drill at the end of Year 4 is $350,000. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 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 8 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 Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 10%. Use the present value table appearing above. Diamond Core Drill Hydraulic Excavator Present value of net cash flow total Amount to be invested Net present value Which project should be favored?