Holly Co. must choose between gas and electric powered forklift truck for moving materials. Because both forklifts perform the same function, the firm will choose only one. The electric will cost more, but it will be less expensive to operate. It will cost 90,000 where as the gas will cost 60,000. The required rate of return for both investments is 9%. The life for both types of trucks is 9 years during which the net cash flows will be 17,200 per year for the electric and 13,100 per year for the gas. Calculate npv and irr for each truck and decide which to recommend.
As per NPV and IRR... View the full answer