Question

Problem 10-08 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

a. Calculate the IRR for each project. Round your answers to two decimal places.

Truck: %

Pulley: %

b. Calculate the NPV for each project. Round your answers to the nearest dollar, if necessary. Enter each answer as a whole number. For example, do not enter 1,000,000 as 1 million.

Truck: $   
Pulley: $   

c. Calculate the MIRR for each project. Round your answers to two decimal places.

Truck:  %
Pulley:  %

Please, show step by step. Thank you.

Answer 1