8)

Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: UseAppendix Bfor an approximate answer but calculate your final answer using the formula and financial calculator methods.

Project E		Project H
($19,000 investment)		($19,000 investment)
Year	Cash Flow		Year	Cash Flow
1		$ 4,000		1		$ 15,000
2		5,000		2		4,000
3		6,000		3		3,000
4		13,000

a.	Determine the net present value of the projects based on a zero percent discount rate.

	Net Present Value
Project E	$
Project H	$

b.	Determine the net present value of the projects based on a discount rate of 10 percent.(Do not round intermediate calculations and round your answers to 2 decimal places.)

	Net Present Value
Project E	$
Project H	$

c.	If the projects are not mutually exclusive, which project(s) would you accept if the discount rate is 10 percent?
	Project E Project H Both H and E