Year 3

Posted: November 10th, 2022

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Premium Manufacturing Company is evaluating two 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. If the company uses a 10 percent discount rate for all projects, determine which forklift system should be purchased using the net present value (NPV) approach. Also, Compute the IRR and Payback Period for each of the two systems. (3 Marks)
Year 0
Year 1
Year 2
Year 3
System 1
-$4,123,450
$1,979,225
$1,358,886
$2,111,497
System 2
-$5,137,410 $1,875,236 $1,765,225 $2,865,110

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