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.
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 for each project. Round your answers to two decimal places.
Truck: % What is the correct accept/reject decision for this project? -Select-AcceptRejectItem 2
Pulley: % What is the correct accept/reject decision for this project? -Select-AcceptRejectItem 4
-
Calculate the NPV for each project. Round your answers to the nearest dollar, if necessary. Enter each answer as a whole number. For example, do not enter 1,000,000 as 1 million.
Truck: $ What is the correct accept/reject decision for this project? -Select-AcceptRejectItem 6
Pulley: $ What is the correct accept/reject decision for this project? -Select-AcceptRejectItem 8
-
Calculate the MIRR for each project. Round your answers to two decimal places.
Truck: % What is the correct accept/reject decision for this project? -Select-AcceptRejectItem 10
Pulley: % What is the correct accept/reject decision for this project?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting
Authors: V.K. Gopal
1st Edition
9788174467461
