Question
The Management of Sunland Manufacturing Company is evaluating two forklift systems to use in its plant that produces the towers for a windmill power farm.
The Management of Sunland 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 10percent discount rate for all projects.
| Year 0 | Year 1 | Year 2 | Year 3 | |||||
|---|---|---|---|---|---|---|---|---|
| Otis Forklifts | $-3,134,450 | $995,225 | $1,364,886 | $2,102,497 | ||||
| Craigmore Forklifts | $-4,147,410 | $873,236 | $1,755,225 | $2,877,110 |
| NPV | ||
|---|---|---|
| Otis forklift | $477,942 | |
| Craigmore Forklifts | $258,655 |
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%.)
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Accounting for Governmental and Nonprofit Entities
Authors: Jacqueline Reck, Suzanne Lowensohn, Earl Wilson
17th edition
78025826, 978-1259564239, 1259564231, 978-0078025822
