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answer the following questions 12-20 Present Value of Costs The Aubey Coffee Company is evaluating the within-plant disribution ss tem for its new are: (1)
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12-20 Present Value of Costs The Aubey Coffee Company is evaluating the within-plant disribution ss tem for its new are: (1) a conveyor system with a high initial cost but low annual operating costs, and (2) several forklift trucks, which cost less but have considerably higher operating costs. The decision to construct the plant has already been made, and the choice here will have no effect on the overall revenues of the project. The cost of capital for the plant is 8%, and the projects' expected net costs are listed in the following table: roasting, grinding, and packing plant. The two alternatives Expected Net Cost Year Forklift Conveyor -$500,000 -$200,000 1 -120,000 -160,000 2 -120,000 -160,000 -120,000 -160,000 -120,000 -160,000 -20,000 -160,000 a. What is the IRR of each alternative? h What is the present value of the costs of each aiterative? Which method should be chosenStep by Step Solution
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