EBOOK Net Present Value-Unequal Lives Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $750,000. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Year Processing Mill Electric Shovel 1 $310,000 $330,000 2 260,000 325,000 3 260,000 325,000 260,000 320,000 180,000 130,000 120,000 8 120,000 The estimated residual value of the processing mill at the end of Year 4 is $280,000. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 0.303 0.603 0.523 0.803 Check My Work 3 more Check My Work uses remaining Previous 200,000 325,000 260,000 325,000 4 260,000 320,000 5 180,000 6 130,000 120,000 8 120,000 The estimated residual value of the processing mill at the end of Year 4 is $280,000, Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840. 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Check My Work 3 more Check My Work uses remaining DELL Previous Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 15%. Use the present value table appearing above. If required, round to the nearest dollar. Present value of net cash flow total Less amount to be invested Net present value Which project should be favored? Processing Mill Electric Shovel Check My Work more Check My Work uses remaining