P9-7 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 independent. The cash outlay for the truck is $22,430, and for the pulley system it is $17,100. Each piece of equipment has an estimated life of five years. The annual after-tax cash flow expected to be provided by the truck is $7,500, and for the pulley it is $5,100. The firm's required rate of return is 14 percent. Calculate the NPV, IRR, MIRR, the traditional payback (PB) period, and the discounted payback (DPB) period for each project. lindicate which project(s) should be accepted.
P9-7 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 independent. The cash outlay for the truck is $22,430, and for the pulley system it is $17,100. Each piece of equipment has an estimated life of five years. The annual after-tax cash flow expected to be provided by the truck is $7,500, and for the pulley it is $5,100. The firm's required rate of return is 14 percent. Calculate the NPV, IRR, MIRR, the traditional payback (PB) period, and the discounted payback (DPB) period for each project. lindicate which project(s) should be accepted.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:P9-7 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 independent. The cash outlay for the truck is $22,430, and for the pulley
system it is $17,100. Each piece of equipment has an estimated life of five years. The annual after-tax cash flow
expected to be provided by the truck is $7,500, and for the pulley it is $5,100. The firm's required rate of return is 14
percent. Calculate the NPV, IRR, MIRR, the traditional payback (PB) period, and the discounted payback (DPB)
period for each project. lindicate which project(s) should be accepted.
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