FM11 9 - 6 )] = -$17,500 + $5,000(4.1114) = -$17,500 +...

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Answers and Solutions: 11 - 9 11-9 Electric-powered: NPV E = -$22,000 + $6,290 [(1/i)-(1/(i*(1+i) n )] = -$22,000 + $6,290 [(1/0.12)-(1/(0.12*(1+0.12) 6 )] = -$22,000 + $6,290(4.1114) = -$22,000 + $25,861 = $3,861. Financial calculator: Input the appropriate cash flows into the cash flow register, input I = 12, and then solve for NPV = $3,861. Financial calculator: Input the appropriate cash flows into the cash flow register and then solve for IRR = 18%. Gas-powered: NPV G = -$17,500 + $5,000 [(1/i)-(1/(i*(1+i) n )] = -$17,500 + $5,000 [(1/0.12)-(1/(0.12*(1+0.12)
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Unformatted text preview: 6 )] = -$17,500 + $5,000(4.1114) = -$17,500 + $20,557 = $3,057. Financial calculator: Input the appropriate cash flows into the cash flow register, input I = 12, and then solve for NPV = $3,057. Financial calculator: Input the appropriate cash flows into the cash flow register and then solve for IRR = 17.97% 18%. The firm should purchase the electric-powered forklift because it has a higher NPV than the gas-powered forklift. The company gets a high rate of return (18% > r = 12%) on a larger investment....
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