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Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $720,000. The net cash flows estimated for the two proposals are as follows:   Net Cash Flow Year      Processing Mill      Electric Shovel 1 $313,000   $346,000   2 276,000   322,000   3 276,000   317,000   4 267,000   314,000   5 183,000       6 147,000       7 135,000       8 135,000       The estimated residual value of the processing mill at the end of Year 4 is $280,000. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.     Open spreadsheet   Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 20%. If required, round to the nearest dollar.   Processing Mill Electric Shovel Net present value $fill in the blank 2 $fill in the blank 3 Which project should be favored?

Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $720,000. The net cash flows estimated for the two proposals are as follows:   Net Cash Flow Year      Processing Mill      Electric Shovel 1 $313,000   $346,000   2 276,000   322,000   3 276,000   317,000   4 267,000   314,000   5 183,000       6 147,000       7 135,000       8 135,000       The estimated residual value of the processing mill at the end of Year 4 is $280,000. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.     Open spreadsheet   Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 20%. If required, round to the nearest dollar.   Processing Mill Electric Shovel Net present value $fill in the blank 2 $fill in the blank 3 Which project should be favored?

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 21E: Net present value-unequal lives Bunker Hill Mining Company has two competing proposals: a processing...
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Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $720,000. The net cash flows estimated for the two proposals are as follows:

  Net Cash Flow
Year      Processing Mill      Electric Shovel
1 $313,000   $346,000  
2 276,000   322,000  
3 276,000   317,000  
4 267,000   314,000  
5 183,000      
6 147,000      
7 135,000      
8 135,000      

The estimated residual value of the processing mill at the end of Year 4 is $280,000.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

 

 
Open spreadsheet

 

Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 20%. If required, round to the nearest dollar.

  Processing Mill Electric Shovel
Net present value $fill in the blank 2 $fill in the blank 3

Which project should be favored?

 

 

Net present value-unequal lives Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. The following data is nrovided: DATA Net Cash Flow Processing Mill $313,000 Electric Shovel $346,000 Year 322,000 317,000 314,000 276,000 3 276,000 267,000 280,000 183,000 147,000 135,000 135,000 4 4 (residual value) 5 6 7 Initial investment $720,000 Minimum rate of return 20% Using tormuias ana cell rererences, perrorm tne requirea anaiysıs, ana input your answers into the Processıng MIII ana Electric Shovel columns. Transfer the numeric results for the green entry cells (C24:D24) into the appropriate fields in CNOWV2 for aradina Processing Mill Electric Shovel Formulas Net present value
Transcribed Image Text:Net present value-unequal lives Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. The following data is nrovided: DATA Net Cash Flow Processing Mill $313,000 Electric Shovel $346,000 Year 322,000 317,000 314,000 276,000 3 276,000 267,000 280,000 183,000 147,000 135,000 135,000 4 4 (residual value) 5 6 7 Initial investment $720,000 Minimum rate of return 20% Using tormuias ana cell rererences, perrorm tne requirea anaiysıs, ana input your answers into the Processıng MIII ana Electric Shovel columns. Transfer the numeric results for the green entry cells (C24:D24) into the appropriate fields in CNOWV2 for aradina Processing Mill Electric Shovel Formulas Net present value
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