Axis Corp. is studying two mutually exclusive projects. Project Kelvin involves an overhaul of the existing system; it will cost $52,500 and generate cash inflows of $25,000 per year for the next 3 years. Project Thompson replaces the existing system; it will cost $265,000 and generate cash inflows of $61,000 per year for 6 years. Using a(n) 9.13% cost of capital, calculate each project's NPV, and make a recommendation based on your findings. The NPV of project Kelvin is $ (Round to the nearest cent.)

Axis Corp. is studying two mutually exclusive projects. Project Kelvin involves an overhaul of the existing system; it will cost $52,500 and generate cash inflows of $25,000 per year for the next 3 years. Project Thompson replaces the existing system; it will cost $265,000 and generate cash inflows of $61,000 per year for 6 years. Using a(n) 9.13% cost of capital, calculate each project's NPV, and make a recommendation based on your findings. The NPV of project Kelvin is $ (Round to the nearest cent.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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