Question

Problem 12-23 Net present value profile [LO4]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 Bfor an approximate answer but calculate your final answer using the formula and financial calculator methods.     
 Project E Project H($52,000 investment) ($47,000 investment)YearCash Flow YearCash Flow1 $ 10,000     1 $ 27,000    2 14,000     2 19,000    3 24,000     3 15,000    4 31,000             
 a.Determine the net present value of the projects based on a zero percent discount rate.     
  Net Present Value  Project E $     Project H $        
 b.Determine the net present value of the projects based on a discount rate of 9 percent. (Do not round intermediate calculations and round your answers to 2 decimal places.)     
  Net Present Value  Project E $     Project H $     
 c.If the projects are not mutually exclusive, which project(s) would you accept if the discount rate is 9 percent?     Project EProject HBoth H and E

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