Net Present ValueUnequal Lives

Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $730,000. The net cash flows estimated for the two proposals are as follows:

Year	Net Cash Flow Diamond Core Drill	Net Cash Flow Hydraulic Excavator
1	$312,000	$338,000
2	277,000	318,000
3	277,000	312,000
4	270,000	320,000
5	176,000
6	148,000
7	132,000
8	132,000

The estimated residual value of the diamond core drill at the end of Year 4 is $270,000.

Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 15%. If required, round to the nearest dollar.

Line Item Description	Diamond Core Drill	Hydraulic Excavator
Net present value	fill in the blank 1 of 2$	fill in the blank 2 of 2$

Which project should be favored?

Diamond Core DrillHydraulic ExcavatorNeither because they are equal