Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $790,000. The net cash flows estimated for the two proposals are as follows: Year Net Cash Flow Diamond Core Drill Net Cash Flow Hydraulic Excavator 1 $316,000 $348,000 2 259,000 319,000 3 259,000 315,000 4 269,000 317,000 5 173,000 6 132,000 7 144,000 8 144,000 The estimated residual value of the diamond core drill at the end of Year 4 is $290,000. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 6%. If required, round to the nearest dollar. Line Item Description Diamond Core Drill Hydraulic Excavator Net present value fill in the blank 1 of 2$ fill in the blank 2 of 2$
Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $790,000. The net cash flows estimated for the two proposals are as follows: Year Net Cash Flow Diamond Core Drill Net Cash Flow Hydraulic Excavator 1 $316,000 $348,000 2 259,000 319,000 3 259,000 315,000 4 269,000 317,000 5 173,000 6 132,000 7 144,000 8 144,000 The estimated residual value of the diamond core drill at the end of Year 4 is $290,000. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 6%. If required, round to the nearest dollar. Line Item Description Diamond Core Drill Hydraulic Excavator Net present value fill in the blank 1 of 2$ fill in the blank 2 of 2$
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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Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $790,000. The net cash flows estimated for the two proposals are as follows:
| Year | Net Cash Flow Diamond Core Drill |
Net Cash Flow Hydraulic Excavator |
|---|---|---|
| 1 | $316,000 | $348,000 |
| 2 | 259,000 | 319,000 |
| 3 | 259,000 | 315,000 |
| 4 | 269,000 | 317,000 |
| 5 | 173,000 | |
| 6 | 132,000 | |
| 7 | 144,000 | |
| 8 | 144,000 |
The estimated residual value of the diamond core drill at the end of Year 4 is $290,000.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum
| Line Item Description | Diamond Core Drill | Hydraulic Excavator |
|---|---|---|
| fill in the blank 1 of 2$ | fill in the blank 2 of 2$ |
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