Abbondante Multinational Inc. has to decide between a gas powered and an electric - powered forklift. The company will buy only one forklift. The gas-powered forklift costs $17,600 and has cash flows of $5,700 per year for 8 years. The electric - powered forklift will cost $ 22, 100 and has cash flows of $5,900 per year for 6 years. The cost of capital is 9.57%. Calculate the NPV and the IRR for each forklift. Which one should the company select? Why? Calculate the profitability index for both. Which one should the company select? Why?

Abbondante Multinational Inc. has to decide between a gas powered and an electric - powered forklift. The company will buy only one forklift. The gas-powered forklift costs $17,600 and has cash flows of $5,700 per year for 8 years. The electric - powered forklift will cost $ 22, 100 and has cash flows of $5,900 per year for 6 years. The cost of capital is 9.57%. Calculate the NPV and the IRR for each forklift. Which one should the company select? Why? Calculate the profitability index for both. Which one should the company select? Why?

Name: Abbondante Multinational Inc. has to decide between agas powered and
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Description: Abbondante Multinational Inc. has to decide between agas powered and an electric - powered forklift. Thecompany will buy only one forklift. The gas - poweredforklift costs $17,600 and has cash flows of $5,700 peryear for 8 years. The electric - powe

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 16P: Shao Airlines is considering the purchase of two alternative planes. Plane A has an expected life of...

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