Keller Construction is considering two new 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 projects. The investment and cash flow patterns are as follows:
Year Project E Cash Flow Project H Cash Flow
0 ($25,000 investment) ($27,000 investment)
1 $6,000 $18,000
2 $9,000 $9,000
3 $10,000 $7,000
4 $13,000
Required:
a. Determine the net present value of the projects based on a zero percent discount rate.
b. Determine the net present value of the projects based on a discount rate of 9 percent.
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Keller Construction is considering two new investments. Project E calls for the purchase of earthmov...
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