b. What are the two projects’ IRRs at these same costs of capital?

INTERMEDIATE PROBLEMS 8–18

(10–8)

NPVs, IRRs, and MIRRs for Independent Projects 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 $17,100 and that for the pulley system is

$22,430. The firm’s cost of capital is 14%. 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