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 $18,000, and that for the pulley system is $22,000. 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, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Use a minus sign to enter negative values, if any.
Truck | Pulley | ||||
Value | Decision | Value | Decision | ||
IRR | % | -Select-AcceptRejectItem 2 | % | -Select-AcceptRejectItem 4 | |
NPV | $ | -Select-AcceptRejectItem 6 | $ | -Select-AcceptRejectItem 8 | |
MIRR | % | -Select-AcceptRejectItem 10 | % | -Select-AcceptRejectItem 12 |
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