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, 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 | % | Accept/Reject | % | Accept/Reject | |
| NPV | $ | Accept/Reject | $ | Accept/Reject | |
| MIRR | % | Accept/Reject | % | Accept/Reject | |
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