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Lenneberg Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this years capital budget. The projects are independent.
Lenneberg 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 $25,100 and that for the pulley system is $42,500. The firms cost of capital is 14%. After-tax cash flows, including depreciation, are as follows: Year Truck Pulley 1 8,000 11,500 2 8,000 11,500 3 8,000 11,500 4 8,000 11,500 5 8,000 11,500 Calculate; I. Payback II. Discounted Payback III. NPV IV. IRR.
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