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Jack Engineering is considering two projects, Project Alpha and Project Beta system, in this year's capital budget. The projects are independent. The cash outlay for
- Jack Engineering is considering two projects, Project Alpha and Project Beta system, in this year's capital budget. The projects are independent. The cash outlay for the Project Alpha is $44,860 and that for the Project Beta is $34,200. The firm's cost of capital is 14%. After-tax cash flows, including depreciation, are as follows:
Year | Project Alpha | Project Beta |
1 | 15,000 | 10,200 |
2 | 15,000 | 10,200 |
3 | 15,000 | 10,200 |
4 | 15,000 | 10,200 |
5 | 15,000 | 10,200 |
Required:
- Calculate the IRR for each project.
(6 marks)
- Calculate the NPV, for each project
(6 marks)
- Calculate the MIRR for each project
(6 marks)
- Indicate the correct accept-reject decision for each.
(2 marks)
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