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: Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Project E					Project H
($34,000 Investment)					($25,000 Investment)
Year	Cash Flow				Year	Cash Flow
1	$	11,000			1	$	15,000
2		14,000			2		14,000
3		15,000			3		12,000
4		17,000

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

b. Determine the net present value of the projects based on a discount rate of 12 percent. (Do not round intermediate calculations and round your answers to 2 decimal places.)

c. If the projects are not mutually exclusive, which project(s) would you accept if the discount rate is 12 percent?

multiple choice

• Project E

• Project H

• Both H and E

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: Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project E ($34,680 Investment) Year Cash Flow 1 $11,000 2 14,000 3 15, eee 4 17, see Project H ($25,eea Investment) Year Cash Flow 1 $15, eee 2 14,000 3 12,wee a. Determine the net present value of the projects based on a zero percent discount rate. Net Pres Project E Project b. Determine the net present value of the projects based on a discount rate of 12 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 12 percent? O Project E O Project 1 O Both H and E 1 Appendix B Present value of $1, PVF PV = FV Percent 1% 0.990 Period 1 2 3 3 4 5 12% 0.893 0.797 0.712 0.636 6 7 8 9 10 11 2% 0.980 0.961 0.942 0.924 0.906 0.888 W...o 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372 0.980 0.971 0.961 0.951 0.942 W.24 0.933 0.923 0.914 0.905 0.896 0.887 0.879 02 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0.608 3% 0.971 0.943 0.915 0.888 0.863 W. 0.837 wios 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.478 0.412 0.307 0.228 0.962 0.925 0.889 0.855 0.822 0.790 0.730 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456 0.375 0.308 0.208 0.141 12 5% 0.952 0.907 0.864 0.823 0.784 0.746 wo 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.81 0.458 0.436 0.416 0.396 0.377 0.295 0.231 0.142 0.087 6% 0.943 0.890 0.840 0.792 0.747 0.705 w.ros 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 w 0.394 0.371 0.350 0.331 0.312 0.233 0.174 0.097 0.054 7% 0.935 0.873 0.816 0.763 0.713 0.666 w.com 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.362 0.339 0.317 0.296 0.277 0.258 0.184 0.131 8% 0.926 0.857 0.794 0.735 0.681 0.630 word 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.315 0.292 0.270 0.250 0.232 0.215 0.146 0.099 11% 0.901 0.812 0.731 0.659 0.593 . 0.535 W. 0.482 0.434 0.391 0.352 0.317 0.286 0.258 9% 0.917 0.842 0.772 0.708 0.650 woso 0.596 W. 0.547 0.502 0.460 0.422 0.388 0.356 0.326 200 0.299 0.275 0.252 0.231 0.212 0.194 0.178 0.116 0.075 0.032 0.013 10% 0.909 0.826 0.751 0.683 0.621 w.com 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149 0.092 0.057 13 14 0.232 0.567 0.507 0.50 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.059 0.033 0.011 15 1 16 17 18 19 20 25 30 40 50 0.209 0.188 0.170 0.153 0.138 0.124 0.074 0.044 0.015 0.005 0.067 0.034 0.046 0.021 0.022 0.009 0.003 Copyright 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Appendix B (concluded) Present value of $1 Period 25% 15% 0.870 1 2 3 4 5 6 8 10 11 13% 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.261 0.231 0.204 0.181 0.160 0.141 0.125 0.111 0.098 0.087 0.047 0.026 0.008 0.002 14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073 0.038 0.020 0.005 0.001 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.061 0.030 0.015 0.004 0.001 16% 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.080 0.069 0.060 0.051 0.024 0.012 0.003 0.001 12 13 17% 0.855 0.731 0.624 0.534 0.456 0.390 0.333 0.285 0.243 0.208 0.178 0.152 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.043 0.020 0.009 0.002 0 Percent 19% 0.840 0.706 0.593 0.499 0.419 0.352 0.296 0.249 0.209 0.176 0.148 0.124 0.104 0.088 0.074 0.062 0.052 0.044 0.037 0.031 0.013 0.005 0.001 0 18% 0.847 0.718 0.609 0.515 0.437 0.370 0.314 0.266 0.225 0.191 0.162 0.137 0.116 0.099 0.084 0.071 0.060 0.051 0.043 0.037 0.016 0.007 0.001 0 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.078 0.065 0.054 0.045 0.038 0.031 0.026 0.010 0.004 0.001 o 0.800 0.640 0.512 0.410 0.328 0.262 0.210 0.168 0.134 0.107 0.086 0.069 0.055 0.044 0.035 0.028 0.023 0.018 0.014 0.012 0.004 0.001 30% 0.769 0.592 0.455 0.350 0.269 0.207 0.159 0.123 0.094 0.073 0.056 0.043 0.033 0.025 0.020 0.015 0.012 0.009 0.007 0.005 0.001 o 0 0 35% 0.741 0.549 0.406 0.301 0.223 0.165 0.122 0.091 0.067 0.050 0.037 0.027 0.020 0.015 0.011 0.008 0.006 0.005 0.003 0.002 0.001 0 0 0 40% 0.714 0.510 0.364 0.260 0.186 0.133 0.095 0.068 0.048 0.035 0.025 0.018 0.013 0.009 0.006 0.005 0.003 0.002 0.002 0.001 50% 0.667 0.444 0.296 0.198 0.132 0.088 0.059 0.039 0.026 0.017 0.012 0.008 0.005 0.003 0.002 0.002 0.001 0.001 14 15 16 17 18 19 20 25 30 40 50 Copyright 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 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: Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project E ($34,680 Investment) Year Cash Flow 1 $11,000 2 14,000 3 15, eee 4 17, see Project H ($25,eea Investment) Year Cash Flow 1 $15, eee 2 14,000 3 12,wee a. Determine the net present value of the projects based on a zero percent discount rate. Net Pres Project E Project b. Determine the net present value of the projects based on a discount rate of 12 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 12 percent? O Project E O Project 1 O Both H and E 1 Appendix B Present value of $1, PVF PV = FV Percent 1% 0.990 Period 1 2 3 3 4 5 12% 0.893 0.797 0.712 0.636 6 7 8 9 10 11 2% 0.980 0.961 0.942 0.924 0.906 0.888 W...o 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372 0.980 0.971 0.961 0.951 0.942 W.24 0.933 0.923 0.914 0.905 0.896 0.887 0.879 02 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0.608 3% 0.971 0.943 0.915 0.888 0.863 W. 0.837 wios 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.478 0.412 0.307 0.228 0.962 0.925 0.889 0.855 0.822 0.790 0.730 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456 0.375 0.308 0.208 0.141 12 5% 0.952 0.907 0.864 0.823 0.784 0.746 wo 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.81 0.458 0.436 0.416 0.396 0.377 0.295 0.231 0.142 0.087 6% 0.943 0.890 0.840 0.792 0.747 0.705 w.ros 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 w 0.394 0.371 0.350 0.331 0.312 0.233 0.174 0.097 0.054 7% 0.935 0.873 0.816 0.763 0.713 0.666 w.com 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.362 0.339 0.317 0.296 0.277 0.258 0.184 0.131 8% 0.926 0.857 0.794 0.735 0.681 0.630 word 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.315 0.292 0.270 0.250 0.232 0.215 0.146 0.099 11% 0.901 0.812 0.731 0.659 0.593 . 0.535 W. 0.482 0.434 0.391 0.352 0.317 0.286 0.258 9% 0.917 0.842 0.772 0.708 0.650 woso 0.596 W. 0.547 0.502 0.460 0.422 0.388 0.356 0.326 200 0.299 0.275 0.252 0.231 0.212 0.194 0.178 0.116 0.075 0.032 0.013 10% 0.909 0.826 0.751 0.683 0.621 w.com 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149 0.092 0.057 13 14 0.232 0.567 0.507 0.50 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.059 0.033 0.011 15 1 16 17 18 19 20 25 30 40 50 0.209 0.188 0.170 0.153 0.138 0.124 0.074 0.044 0.015 0.005 0.067 0.034 0.046 0.021 0.022 0.009 0.003 Copyright 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Appendix B (concluded) Present value of $1 Period 25% 15% 0.870 1 2 3 4 5 6 8 10 11 13% 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.261 0.231 0.204 0.181 0.160 0.141 0.125 0.111 0.098 0.087 0.047 0.026 0.008 0.002 14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073 0.038 0.020 0.005 0.001 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.061 0.030 0.015 0.004 0.001 16% 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.080 0.069 0.060 0.051 0.024 0.012 0.003 0.001 12 13 17% 0.855 0.731 0.624 0.534 0.456 0.390 0.333 0.285 0.243 0.208 0.178 0.152 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.043 0.020 0.009 0.002 0 Percent 19% 0.840 0.706 0.593 0.499 0.419 0.352 0.296 0.249 0.209 0.176 0.148 0.124 0.104 0.088 0.074 0.062 0.052 0.044 0.037 0.031 0.013 0.005 0.001 0 18% 0.847 0.718 0.609 0.515 0.437 0.370 0.314 0.266 0.225 0.191 0.162 0.137 0.116 0.099 0.084 0.071 0.060 0.051 0.043 0.037 0.016 0.007 0.001 0 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.078 0.065 0.054 0.045 0.038 0.031 0.026 0.010 0.004 0.001 o 0.800 0.640 0.512 0.410 0.328 0.262 0.210 0.168 0.134 0.107 0.086 0.069 0.055 0.044 0.035 0.028 0.023 0.018 0.014 0.012 0.004 0.001 30% 0.769 0.592 0.455 0.350 0.269 0.207 0.159 0.123 0.094 0.073 0.056 0.043 0.033 0.025 0.020 0.015 0.012 0.009 0.007 0.005 0.001 o 0 0 35% 0.741 0.549 0.406 0.301 0.223 0.165 0.122 0.091 0.067 0.050 0.037 0.027 0.020 0.015 0.011 0.008 0.006 0.005 0.003 0.002 0.001 0 0 0 40% 0.714 0.510 0.364 0.260 0.186 0.133 0.095 0.068 0.048 0.035 0.025 0.018 0.013 0.009 0.006 0.005 0.003 0.002 0.002 0.001 50% 0.667 0.444 0.296 0.198 0.132 0.088 0.059 0.039 0.026 0.017 0.012 0.008 0.005 0.003 0.002 0.002 0.001 0.001 14 15 16 17 18 19 20 25 30 40 50 Copyright 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education