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   %       %   NPV $                $              MIRR   %       %

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NPVs, IRRs, and MIRRs for Independent Projects

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   %       %  
NPV $                $             
MIRR   %       %  

 

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