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Question 3 (10 marks = 25 points) Keller Construction is considering two investments. Project E calls for the purchase of earthmoving equipment. Project H represents
Question 3 (10 marks = 25 points) Keller Construction is considering two 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 project. The investment and cash flow patterns are as follows: Project E ($45,000 investment) Project H ($40,000 investment) cashflow year cashflow $12,000 $21,000 2 15,000 2 18,000 3 18,000 3 12,000 4 25,000 year 1 1 A) Determine the net present value of the projects based on a 0% discount rate B) Determine the net present value of the projects based on a 13% discount rate C) The internal rate of return on project E is 13.25%, and the internal rate of return on project H is 16.30%. graph a net present value profile for the two investments (use a scale up to $8,000 on the vertical axis, with $2,000 increments. Use a scale up to 20% on the horizontal axis, with 5% increments)
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