The B T knight Corporation is considering 2 mutually exclusive pieces of machinery that perform the same task The two alternatives available provide the following free cash flows Equipment A 's expected life is 3 years as Equipment B 's expected life is 9 years Assume the required rate of return is 15 a) Calculate each projects Payback period b) Calculate each projects NPV c) Calculate each projects IRR d) Are these projects comparable e) Compare these projects using replacement chains and EAA What project should be selected Support yourrecommendation Equip B S20,000 6 625 6,625 6,625 6,625 6,625 6,625 6 625 6,625 6,625 Equi Initial Outflow $20 000 12 590 12,590 12,590 Inflow year 1 Year 2 Year 3 ear ear Year 6 Y ear Year 8 Year 9

Question: The B T knight Corporation is considering 2 mutually exclusive pieces of machinery that perform the same task. The two alternatives available provide the following

The B T knight Corporation is considering 2 mutually exclusive pieces of machinery that perform the same task. The two alternatives available provide the following free cash flows:

Equipment A's expected life is 3 years as Equipment B's expected life is 9 years. Assume the required rate of return is 15%
a) Calculate each projects Payback period
b)Â Calculate each projects NPV
c) Calculate each projects IRR
d) Are these projects comparable?
e) Compare these projects using replacement chains and EAA. What project should be selected? Support yourrecommendation.

Equip B S20,000 6.625 6,625 6,625 6,625 6,625 6,625 6.625 6,625 6,625 Equi Initial Outflow $20.000 12.590 12,590 12,590 Inflow year 1 Year 2 ...Year 3 ear ear . .Year 6 .. Y ear Year 8 ...Year 9

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a Calculation of Payback period Equipment A Payback period Initial investmentCash inflow 2000012590 158 years Hence the payback period is 158 years fo... View full answer

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