Question
Olsen Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are mutually
Olsen Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are mutually exclusive. The cash outlay for the truck is $17,100 and that for the pulley system is $22,430. Each piece of equipment has an estimated life of 5 years. The after tax cash flow expected to be provided by the truck is $5.100 per year, and for the pulley. it is $7,500 per year. The firm's required rate of return is 14%. Calculate the MIRR and the NPV for each project and indicate which project should be accepted.
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