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Net Present Value-Unequal Lives Bunker Hill Mining Company has two competing proposals: a processing mill...

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Accounting

Net Present Value-Unequal Lives Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $638,424. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Year HN 34 1 $219,000 195,000 195,000 155,000 118,000 99,000 85,000 85,000 The estimated residual value of the processing mill at the end of Year 4 is $270,000. Present Value of $1 at Compound Interest 10% 2 567 8 Year 1 2 3 Processing Mill 6% 0.943 0.890 0.840 0.909 0.826 0.751 12% 0.893 0.797 Electric Shovel 0.712 15% 0.870 $274,000 254,000 234,000 241,000 0.756 0.658 20% 0.833 0.694 0.579
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Net Present Value-Unequal Uves Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel, Both pleces of equipment have an initial investment of $638,424. The net cash flows estimated for the two proposais are as follows: The estimated residual value of the processing mill at the end of Year 4 is $270,000. Present Value of $1 at Compound Interest Determine which equipment should be favored, compsring the net present values of the two proposar and assuming a minimum rate of return of 15%w. Use the present value table appearing above

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