Net Present Value and Competing Projects For discount factors use Exhibit 12B.1 and Exhibit 12B.2. Spiro Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment. After-tax cash inflows for the two competing projects are as follows: Year Puro Equipment Briggs Equipment 1 $320,000 $120,000 2 280,000 120,000 3 240,000 320,000 4 160,000 400,000 5 120,000 440,000 Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar. 1. Assuming a discount rate of 14%, compute the net present value of each piece of equipment. Puro equipment: $ Briggs equipment: $ 2. A third option has surfaced for equipment purchased from an out-of-state supplier. The cost is also $560,000, but this equipment will produce even cash flows over its 5-year life. What must the annual cash flow be for this equipment to be selected over the other two

1. Assuming a discount rate of 14%, compute the net present value of each piece of equipment.

2. A third option has surfaced for equipment purchased from an out-of-state supplier. The cost is also $560,000, but this equipment will produce even cash flows over its 5-year life. What must the annual cash flow be for this equipment to be selected over the other two

Explanation:

Year      Puro Equipment       Briggs Equipment

0             -$560,000                    -$560,000

1               $320,000                      $120,000

2              $280,000                      $120,000

3              $240,000                      $320,000

4               $160,000                      $400,000

5               $120,000                      $440,000

I used an excel spreadsheet to calculate the NPVs

the PV of the third equipment's annual cash flow should be higher than $878,944  (PV of Brigg's cash flows = $560,000 + $318,944)

now I used a annuity table: annuity factor for 5 years and 14% is 3.4331

cash flow x 3.4331 ≥ $878,944

cash flow ≥ $878,944 / 3.4331 = $256,021

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

your welcome leave a rate and a < 3

the correct answer is b.)