Question: Tracy Multinational Inc. has to decide between a gas-powered and an electric-powered forklift. The company will buy only one forklift. The gas-powered forklift costs $17,600

Tracy Multinational Inc. has to decide between a gas-powered and an electric-powered forklift. The company will buy only one forklift. The gas-powered forklift costs $17,600 and has cash flows of $5,400 per year for 6 years. The electric-powered forklift will cost $22,100 and has cash flows of $6,190 per year for 6 years. The cost of capital is 10.57%.

Calculate the NPV and the IRR for each forklift. Which one should the company select? Why?

Calculate the profitability index for both. Which one should the company select? Why?

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NPV and IRR Calculations Gaspowered forklift Initial investment17600 Annual cash flow5400 Discount rate1057 Number of years6 NPV Calculation NPV Initi... View full answer

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