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 $19,000 and that for the pulley system is $20,000. The firm's cost of capital is 12%. After-tax cash flows, including depreciation, are as follows:
Year truck pulley
1 $5100 $7500
2 $5100. $7500
3 $5100. $7500
4 $5100 $7500
5 $5100 $7500
Calculate the IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Truck: % What is the correct accept/reject decision for this project? Based on the IRR, this project should be -Select- . Pulley: % What is the correct accept/reject decision for this project? Based on the IRR, this project should be -Select- . Calculate the NPV for each project. Do not round intermediate calculations. Round your answers to the nearest dollar. Use a minus sign to enter negative values, if any. Truck: $ What is the correct accept/reject decision for this project? Based on the NPV, this project should be -Select- . Pulley: $ What is the correct accept/reject decision for this project? Based on the NPV, this project should be -Select- . Calculate the MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Truck: % What is the correct accept/reject decision for this project? Based on the MIRR, this project should be -Select- . Pulley: % What is the correct accept/reject decision for this project? Based on the MIRR, this project should be -Select- .
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