Question
The Management of Pharoah Manufacturing Company is evaluating two forklift systems to use in its plant that produces the towers for a windmill power farm.
The Management of Pharoah Manufacturing Company is evaluating two forklift systems to use in its plant that produces the towers for a windmill power farm. The costs and the cash flows from these systems are shown below. The company uses a 8 percent discount rate for all projects.
Year 0 | Year 1 | Year 2 | Year 3 | |||||
---|---|---|---|---|---|---|---|---|
Otis Forklifts | $-3,107,450 | $986,225 | $1,356,886 | $2,131,497 | ||||
Craigmore Forklifts | $-4,127,410 | $880,236 | $1,758,225 | $2,855,110 |
NPV | ||
---|---|---|
Otis forklift | $661,083 | |
Craigmore Forklifts | $461,496 |
Compute the IRR for each of the two systems. (Round intermediate calculation to 0 decimal places, e.g. 1,525 and final answers to 2 decimal places, e.g. 15.10%.)
IRR | ||
---|---|---|
Otis forklift | ___________________ % | |
Craigmore Forklifts | ___________________ % |
Is the investment decision different from the one determined by NPV?
The investment decision is same/different from the one determined by NPV.
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