Murkey Development Company has two competing projects; an electric shovel and a processing mill. Both projects have an initial investment or $835,909 The net cash rows estimated for the two projects are as follows: Net Cash Flow Year Electric Shovel Processing MIHI 1 $254,000 $330,000 2 226,000 295,000 3 226,000 272,000 4 180,000 279,000 5 137,000 6 114,000 99,000 B 99,000 The estimated residual value of the electric shovel at the end of Year 4 is $320,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.009 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 + 0.792 0.683 0:636 0572 0.482 0.747 0.621 0.567 0:497 0.402 0.705 0.564 0.507 0.335 2 0.605 0,452 0376 0.279 7 5 6 0.432 The estimated residual value of the electric shovel at the end of Year 415 5320,000 Present Value of $1 at Compound Interest Year 59 10% 12% 15 20% 0.943 0.909 0.593 0.870 0.833 2 0.890 0.826 0.792 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 5 0.792 0.685 0.636 0.572 082 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.53 0.452 0.376 0,279 0.627 0.457 0.404 0.327 0.233 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Compare the net present values of the two projects and assume a minimum rate of return of 10%. Use the present valuable appearing above Electric Shovel Processing MIII Toto present value of net cash flow Les amount to be invested Net present value Which project should be favored? Processing Mm