purchase of a coolant recovery system. Project H represents an heat recovery system. The firm wishes to use a net present value comparing the projects. The investment and cash flow patterns a Project Years

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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7. Miller Electronics is considering two new investments. Project C calls for the
purchase of a coolant recovery system. Project H represents an investment in a
heat recovery system. The firm wishes to use a net present value profile in
comparing the projects. The investment and cash flow patterns are as follows:
Project
Years
Alternatives
1
2
3
4
Project C
Project H
-25,000
-25,000
6,000
20,000
7,000
6,000
9,000
5,000
13,000
a. Determine the net present value of the projects based on a zero-discount rate
and comment on your answer.
Transcribed Image Text:7. Miller Electronics is considering two new investments. Project C calls for the purchase of a coolant recovery system. Project H represents an investment in a heat recovery system. The firm wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Project Years Alternatives 1 2 3 4 Project C Project H -25,000 -25,000 6,000 20,000 7,000 6,000 9,000 5,000 13,000 a. Determine the net present value of the projects based on a zero-discount rate and comment on your answer.
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