Net Present Value

You are a consultant of project manager Edelman Engineering is considering two pieces of equipment, a truck and an pulley system. The project is independent. The cash outlay for the truck is $17,100, and for the pulley system is $22,400. The cost of capital is 14 percent. This is the cash flows of those investments.

YEAR TRUCK PULLEY

1 $5,100 $7,500

2 4,500 7,300

3 4,750 8,200

4 5,300 9,100

5. 5,700 4,200

1) Calculate each projects Payback period, Net Present Value (NPV), and

Internal Rate of Return (IRR)

2) Which project should be accepted if they are independent?

3) If the project is Mutually exclusive, which one do you choose?