LON-CAPA%20#6 Capital Budgeting

LON-CAPA%20#6 Capital Budgeting - This is a problem with...

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Unformatted text preview: This is a problem with mutually exclusive projects. You only have to do the net present value method, so you can evaluate the projects separately, or you can combine them. But if you evaluate them separately, the answer you submit must be the difference in the two net present values (see the directions for the correct sign to use). As you determine the cash flows, make sure you figure out the correct project life and do the right thing with the current disposal value of the current machines. And finally, READ EVERYTHING VERY, VERY, VERY CAREFULLY. ______________________________________________________ Northern Illinois University is considering replacing some Canon copiers with faster copiers purchased from Kodak. The university's 5 Canon machines were purchased for $9,600 each, 6 years ago. They had an expected life of 11 years. They can each be sold immediately for $800; their resale value in 5 more years will be zero. The total cost of the new Kodak equipment will be $73,000; the equipment will have a life of 5 years and a total disposal value at that time of $1,900.$73,000; the equipment will have a life of 5 years and a total disposal value at that time of $1,900....
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LON-CAPA%20#6 Capital Budgeting - This is a problem with...

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