Question
Contact Manufacturing Inc. is considering two alternative investment proposals. The first proposal calls for a major renovation of the company's manufacturing facility. The second involves
Contact Manufacturing Inc. is considering two alternative investment proposals. The first proposal calls for a major renovation of the company's manufacturing facility. The second involves replacing just a few obsolete pieces of equipment in the facility. The company will choose one project or the other this year, but it will not do both. The cash flows associated with each project appear below and the firm discounts project cash flow at 15%
Year Renovate Replace
0 -9,000,000 -2,400,000
1 3,000,000 2,000,000
2 3,000,000 800,000
3 3,000,000 200,000
4 3,000,000 200,000
5 3,000,000 200,000
1.Chart the NPV profiles of these projects. Label the intersection points on the x- and y- axis and the cross over point
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