3. Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system in this years capital budget. The projects are independent. The cash outlay for the truck is $17,100 and for the pulley system it is $22,430. After tax cash flows 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 The firm has $200,000 in debt with an interest rate of 6.5% $100,000 in preferred stock with an annual dividend rate of 9.5%, and $250,000 in equity with a cost of 17.0%. Edelmans tax rate is 25%. Calculate the WACC to be used for this project?

a. Calculate the DPB for each project.

b. Indicate the correct accept or reject decision for each project.