# Keller Construction is conside

Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

 Project E Project H (\$32,000 Investment) (\$27,000 Investment) Year Cash Flow Year Cash Flow 1 \$ 10,000 1 \$ 15,000 2 13,000 2 13,000 3 14,000 3 11,000 4 16,000

a.Determine the net present value of the projects based on a zero percent discount rate.

– Determine the net present value of the projects based on a discount rate of 9 percent.

c.If the projects are not mutually exclusive, which project(s) would you accept if the discount rate is 9 percent?

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# Keller Construction is conside

Keller Construction is considering two new investments, Project E calls for the purchase of earthmoving equipment Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Use Annendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Project E, Project H
(\$42,000 Investment), (\$40,000 Investment)
Year Cash Flow Year Cash Flow
1= \$10,000, 1 =\$21,000
2 = 15,000, 2 = 16,000
3= 21,000, 3 = 14,000
4 = 23.000
a. Determine the net present value of the projects based on a zero percent discount rate. Answer is complete but not entirely correct. Project E Project H Net Present Value s 53,000 \$ 39.000
b. Determine the net present value of the projects based on a discount rate of 12 percent. (Do not round intermediate calculations and round your answers to 2 decimal places.) Answer is not complete. Net Present Value 10,261.52 Project \$ Project H c. If the projects are not mutually exclusive, which project(s) would you accept if the discount rate is 12 percent? Project E Project H Both Hand E

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