ࡱ> 130 @ 0bjbjVV "r<r<6666666J JLNNNNNN$Rbr!6r66XXX:66LXLXX66X R|;FXL0X>XJJ66666X XrrJJ$n$N JJn1) Davis Industries must choose between a gas powered and a electric powered forklift truck for moving materials in its factory. Since both forklifts perform the same function , the firm will choose only one. The are mutually exclusive investments. The electric powered truck will cost more but it will be less expensive to operate. It will cost 22000 whereas the gas powered truck will cost 17500 .the cost of the capital applies to both investments is 12%. The life for both types of truck is estimated to be 6 yeatrs during which time the net cash flows for the electric powered truck will be 6290 per year and those the gas powred truck will be 5000 per year. Annual net cash flows include depreciation expenses. Calculate the NPV and IRR for each type of truck and decide which to recommend Electric-powered: NPVE = -$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: NPVG = -$17,500 + $5,000 [(1/i)-(1/(i*(1+i)n)] = -$17,500 + $5,000 [(1/0.12)-(1/(0.12*(1+0.12)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% H" 18%. The firm should choose the electric-powered forklift because it has a higher NPV & a higher IRR.   . 3 4 [ \   5 6 രhhh55\hA=h55CJ\hA=h55H*\hA=h55H*\hA=h55\hA=h556\h5 hA=h5  / 0 _ T U $$$ `08`a$gd5$$$ `08^a$gd5$$$ `0`a$gd5$$$ `08a$gd5gd5  9 u v gd5$ `08^a$gd5$$$ `08^a$gd5$$$ `08a$gd5$$$ `0`a$gd5 1h/ =!"#$%D@D NormalCJ_HaJmH nHsH tHDA@D Default Paragraph FontRiR  Table Normal4 l4a (k(No List/0_TU9uvvw@0@0@0@0@0@0@0@0@0@0@@0@0@0@@0@0@0@0@0@0`@0@@0`@0@0 @0`My00vvwn{004@?2n{00H4n{00n{00l{00l{00l{00 0bP]4    tzTU:;RT33333.AQtz1-3Q9@Ixn!Mp@u( )B\@R^f~3Dj ze k \ , / N m < R jn j2 ~ (gXeu0FVJR@U_ T!=3*fZj2~_`c:f6 3';uDr.Q/{W?Irxm1ot?jl&@Tpb+>K Li: ho~+&?U{y !!Tr!3"`"_##$$5$v$<%ZI%9 &?&[W&??'t'l#(Sr())4)9*w?*+B+L+,7,!^,'o,---&%.oo.\ /b/b/<0 \0:\0qK1mO1 2Rb23s3|3h44^14c4f.57E5b5!6X~>x-?0?8?J?R?*Y?@`E@H@9ATBBBs~BCWCkyC47DHD\D>!Ev=E #FA#F=FOJF?tFvFG/G iGcH$H:H IhI(JIJ.PJhJ KcuR SUSAS WS#ySTV;#Vy4VtVkW"Y2Y Z(Z=ZOZBbZeZGjZ; [N['\8\[\]_]$_+_8_c_k_yz_`~` 5aTaCbIbgb/hblb pbH8cdCd^dm2eYePf g g}Ygggh?lhMi0Qiei/j]mj ko_lc n nqnxno\o1pLpbpM{ppQqWq/rLPr;stEt}t uWv/xw yDz"{|5|}N}~~~~~Y~8Jy9G8LTt.|P%~Z wJVz"YK'[c}2IT|4*4nYvZ_j9L=Ke8i,.j5R*5:?}OYaNA3r: K(e#<i? >B|\H )CL:WSEl :0MASM0%23'N;fiFBWkB7c\z;W6zVh_g=qrESgmt7I8~Jz sSD&G >V5xs.g$*N3Cj6?T_lmO#<K/8!zB-a&<|JE2Z2aJJ'`:u&|2h!O|ul$4Y m5 y-;jEB;@iK[2^bVMM{Zl^uUZ c@*cN+i2kk#1(s1 4uV:z/QvnW&&#:??.`E]KPd2N DQ6=&/IP0*]^dFb EiUs b<Dgj5QRr5KNMQ}|2BKSVaHdi})c3IRI^03o;CG r]e^!lH=GS[h]VN;h1))+ x ; mM#,0:W_a.(<!!A jkQHole-@09:RL\4F-b#{}@88 p@pUnknownG:Ax Times New Roman5Symbol3& :Cx Arial;(SimSun[SO"qhZ,F[,F  !24 3q H)?N[1) BusinessTutor BusinessTutorOh+'0t  0 < HT\dl1)BusinessTutorNormalBusinessTutor1Microsoft Word 10.0@@@*2՜.+,0 hp  Hewlett-Packard  1) Title !"#$%&')*+,-./2Root Entry F};4Data  1TableWordDocument"SummaryInformation( DocumentSummaryInformation8(CompObjj  FMicrosoft Word Document MSWordDocWord.Document.89q