1 2 Bunker Hill Mining Company Has Two Competing Proposals A Processing Mill And An Electric Shovel Both Pieces Of Equ 1 (38.89 KiB) Viewed 38 times
1 2 Bunker Hill Mining Company Has Two Competing Proposals A Processing Mill And An Electric Shovel Both Pieces Of Equ 2 (35.9 KiB) Viewed 38 times
1 2 Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $743,490. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Year Processing Mill Electric Shovel $227,000 $284,000 202,000 263.000 202,000 243,000 161,000 250,000 123,000 102,000 89,000 89,000 The estimated residual value of the processing millst the end of year 4 i 5200.000 4 8 Year 1 Present Value of si at Compound Interest 6% 10% 12% 15% 209 0.943 0.900 0.893 0.870 0.833 0.590 0.620 0.797 0.756 0.604 0940 0.751 0.712 0.650 0.579
5 6 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 2 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 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, Processing Mill Electric Shovel O Present value of net cash flow total Loss amount to be invested Net present value Which profect should be favored?
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!