nLocator assignment-take&inprogress-false; eBook Calculator Year 280,000 280,000

Question

nLocator assignment-take&inprogress-false; eBook Calculator Year 280,000 280,000 280,000 280,000 Equipment $300,000 00,000 300,000 00,000 The wind turbines require an investment of $887,600, while the bicfuel equipment requires an investment of $911,100. No residual value is expected from either project. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 ) 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2402 2.283 2.106 4 3.465 3.170 3.037 2.8ss 2.589 5 4.212 3.791 3.605 3-353 2.991 6 4.917 4355 4.111 3.785 3.326 5.582 4.868 4.564 4.160 3.605 6.210 5.335 4984.487 3.83 6.502 5.759 5.328 4.772 4.03 10 7.360 6145 5.650 5.010 4192

Explanation / Answer

1a Wind turbines Bio fuel Equipment Present value of annual net cash flows 970200 1039500 Less amount o be invested 887600 911100 Net present value 82600 128400 b Present value index Wind turbines 1.09 =970200/887600 Bio fuel Equipment 1.14 =1039500/911100 a Wind turbines Bio fuel Equipment Present value factor 3.17 3.037 Internal rate of return 10% 12%

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