Question
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.
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 that for the pulley system is $22,430. The firms 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 the NPV and the MIRat for each project and indicate the correct accept / reject decision for each.
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