Calculate net present value of the BEHEMOTH compressor

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Reference no: EM132179073

The Stark County executives are considering the purchase of new 130 hp bulldozer and are comparing two models: the BEHEMOTH and the GOLIATH. The BEHEMOTH bulldozer costs $130,000, with a projected annual operating and maintenance cost of $31,000 and a salvage value $15,000 after 7 years. The GOLIATH model costs $175,000, with a projected annual operating and maintenance cost of $22,000 and a salvage value of $21,000 after 7 years.

Calculate the net present value of the BEHEMOTH compressor and the net present value of the GOLIATH compressor, with the cash flows discounted annually at 12%. Which model should be purchased?

Reference no: EM132179073

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