Edelman Engineering plans to include two pieces of equipment - a forklift and a pulley system -
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Question:
Edelman Engineering plans to include two pieces of equipment - a forklift and a pulley system - in the current year's capital budget. They are independent projects. The truck will cost $ 17,100, and the pulley system will cost $ 22,430. The cost of capital is 14%. Here are the after-tax cash flows, including depreciation:
Year | Forklift | Pulley system |
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 internal rate of return, net present value, and modified internal rate of return for the projects and indicate the correct accept / reject decision for each.
Reference book:
Corporate Finance: A Focused Approach by Ehrhardt and Brigham Second Edition
Related Book For
Financial Management Theory and Practice
ISBN: 978-1305632295
15th edition
Authors: Eugene F. Brigham, Michael C. Ehrhardt
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