They have a magnificent team. These people are always kind and willing to listen to your concerns or issues. Better yet, your assignment is always ready before the time, they usually send you a draft to double-check before they finalize your paper.
Module 5——Week 10, 11
. Your company has a cost of capital equal to 10%. If the following projects are mutually exclusive, and you only have the information that is provided, which should you accept?
|
A |
B |
C |
E |
Payback (years) |
1 |
3 |
2 |
5 |
IRR |
16% |
18% |
20% |
15% |
NPV (Millions) |
$20 |
$55 |
$25 |
$80 |
a. A
b. B
c. C
d. B and C
e. E
2. Hagar Industrial Systems Company (HISC) is trying to decide between two different conveyor belt systems. System A costs $290,000, has a four-year life, and requires $85,000 in pretax annual operating costs. System B costs $405,000, has a six-year life, and requires $75,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Whichever system is chosen, it will not be replaced when it wears out. The tax rate is 34 percent and the discount rate is 11 percent.
Calculate the NPV for both conveyor belt systems.
:
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