Net Present Val-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 $843,851. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Year Processing Mill Electric Shovel 1 $257,000 $321,000 2 229,000 298,000 3 229,000 275,000 4 182,000 283,000 139,000 6 116,000 100,000 8 100,000 The estimated residual value of the processing mill at the end of Year 4 is $320,000 Present Value of $1 at Compound Interest 5% 10% 12% 15% 20 1 0.943 0.909 0.870 0.833 2 0.890 0.626 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 9.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 2 0,665 0.51 0,452 0376 0.279 Year 0.893 Check My Wom ODOOR 7 100,000 8 100,000 The estimated residual value of the processing mill at the end of Year 4 is $320,000. Present Value of $1 at Compound Interest Year 696 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 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 B 0.627 0.467 0.404 0.327 0.233 0.592 0.424 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 10%. Use the present value table appearing above. Processing Min Electric Shovel Present value of net cash flow total Less amount to be invested 0.361 Net present value Which project should be favored