Question 9

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: Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project E Project H (543,000 Investment) ($39,000 Investment) Year Cash Flow Year Cash Flow $13,000 1 $19,000 16,000 2 17,000 19,000 3 13,000 26,000 1 2. 3 a. Determine the net present value of the projects based on a zero percent discount rate Net Present Value Project E Project H b. Determine the net present value of the projects based on a discount rate of 9 percent. (Do not round intermediate calculations and round your answers to 2 decimal places.) Net Present Value Project E Project H c. If the projects are not mutually exclusive, which project(s) would you accept if the discount rate is 9 percent? Projecte Project Both Hand E