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Calculate the npv and irr of alpha industries

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Reference no: EM132421955

Alpha industries much choose between a gas- powered and an electric- powered forlift truck for moving materials in its factory. Since, 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 $23000, wheares the gas- powered truck will cost $18750. The cost of capital that applies to both investments is the same 10.5%. The life for both types of truck is extimated to be 7 years, during which time the net cash flows for the electric- powered truck will be $5500 per year and those for the gas power truc wil be $7800 per year. Calculate the NPV and IRR for each type of truc and recommend which type should be purchased?

Reference no: EM132421955

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