Hollygan Co. must choose between gas-powered and an electric-powered forklift truck for moving materials in its factory....

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Hollygan Co. must choose between gas-powered and anelectric-powered forklift truck for moving materials in itsfactory. Because both forklifts perform the same function, the firmwill choose only one. (They are mutually exclusive investments.)The electric-powered truck will cost more, but it will be lessexpensive to operate; it will cost $106,000, whereas the gaspowered truck will cost $80,000. The required rate of return thatapplies to both investments is 11 percent. The life for both typesof truck is estimated be 10 years, during which time the net cashflows for the electric-powered truck will be $20,500 per year andthose for gas-powered truck will be $15,750 per year. Calculate theNPV and IRR for each type of truck, and decide which torecommend.
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Electric truck Discount rate 11000 Year 0 1 2 3 4 5 6 7 8 9 10 Cash flow stream 106000 20500 20500 20500 20500 20500 20500 20500 20500 20500 20500 Discounting factor 1000 1110 1232 1368 1518 1685 1870 2076 2305 2558 2839 Discounted cash flows project 106000000 18468468 16638260 14989423 13503985 12165752 10960137 9873997 8895493 8013958 7219782 NPV Sum of discounted cash flows NPV Electric truck 1472926 Where Discounting factor 1 discount rateCorresponding period in years See Answer

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Hollygan Co. must choose between gas-powered and anelectric-powered forklift truck for moving materials in itsfactory. Because both forklifts perform the same function, the firmwill choose only one. (They are mutually exclusive investments.)The electric-powered truck will cost more, but it will be lessexpensive to operate; it will cost $106,000, whereas the gaspowered truck will cost $80,000. The required rate of return thatapplies to both investments is 11 percent. The life for both typesof truck is estimated be 10 years, during which time the net cashflows for the electric-powered truck will be $20,500 per year andthose for gas-powered truck will be $15,750 per year. Calculate theNPV and IRR for each type of truck, and decide which torecommend.***Please show all work***