Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in
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Question:
Edelman 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 $15,000, and that for the pulley system is $21,000. The firm's cost of capital is 11%. After-tax cash flows, including depreciation, are as follows:
Year | Truck | Pulley | ||
1 | $5,100 | $7,500 | ||
2 | 5,100 | 7,500 | ||
3 | 5,100 | 7,500 | ||
4 | 5,100 | 7,500 | ||
5 | 5,100 | 7,500 |
Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Use a minus sign to enter negative values, if any.
Truck | Pulley | ||||
Value | Decision | Value | Decision | ||
IRR | % | % | |||
NPV | $ | $ | |||
MIRR | % | % |
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt , Eugene F. Brigham
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