Find values for the discounted cash flow rate of return

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Reference no: EM131780011

Question: An engineer in charge of the design of a plant must choose either a batch or a continuous system. The batch system offers a lower initial outlay but, because of higher labor requirements, exhibits a higher operating cost. The cash flows relevant to this decision have been estimated as follows:

	Year 0	Years 1-10 (after taxes)	Discounted cash flow rate of return	Net present worth at 10%
Batch system	-$20,000	$5,600/year	25%	$14,400
Continuous system	-$30,000	$7650/year	22%	$17,000

Check the values given for the discounted cash flow rate of return and net present worth. If the company requires a minimum rate of return of 10 percent, which system should be chosen?

Reference no: EM131780011

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