Olsen Engineering is considering including two pieces of equipmenta truck and an overhead pulley systemin this years
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Olsen Engineering is considering including two pieces of equipment—a truck and an overhead pulley system—in this year’s capital budget. The projects are independent. The cash outlay for the truck is $22,430, and for the pulley system it is $17,100. Each piece of equipment has an estimated life of five years. The annual after-tax cash flow expected to be provided by the truck is $7,500, and for the pulley it is $5,100. The firm’s required rate of return is 14 percent. Calculate the NPV, IRR, MIRR, PB, and DPB for each project. Indicate which project(s) should be accepted.
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