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Calculate the npv and irr for type of truck

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Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate, it will cost $32,000, whereas the gas-powered truck will cost $22,500. The cost of capital that applies to both investments is 13%. The life cycle for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $9200 per year and those for the gas-powered truck will be $5,500 per year. Annual net cash flows include depreciation expenses. Calculate the NPV and IRR for each type of truck and decide which to recommend

Reference no: EM132459669

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