#1

Year	Cash Flow (X)				Cash Flow (Y)
0	$	19,800			$	19,800
1		8,800				10,000
2		9,000				7,750
3		8,750				8,650

Calculate the IRR for each project. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

What is the crossover rate for these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What is the NPV of Projects X and Y at discount rates of 0 percent, 15 percent, and 25 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

#2

You are evaluating two different silicon wafer milling machines. The Techron I costs $294,000, has a three-year life, and has pretax operating costs of $81,000 per year. The Techron II costs $510,000, has a five-year life, and has pretax operating costs of $48,000 per year. For both milling machines, use straight-line depreciation to zero over the projects life and assume a salvage value of $58,000. If your tax rate is 22 percent and your discount rate is 10 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Techron1:

Techron II:

Which machine do you prefer?

multiple choice

• Techron II

• Techron I