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 $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 | ||
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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
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 | ||
-
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
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Research In Finance Volume 24
Authors: Andrew H. Chen
1st Edition
0762313773, 978-0762313778
