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Problem 10-08 NPVs, IRRs, and MIRRs for Independent Projects Edelman Engineering is considering including two pieces...

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 $18,000 and that for the pulley system is $22,000. The firm's cost of capital is 14%. 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

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

    Truck: %

    What is the correct accept/reject decision for this project?


Pulley: %

What is the correct accept/reject decision for this project?


  • 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: $

    What is the correct accept/reject decision for this project?


Pulley: $

What is the correct accept/reject decision for this project?


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

    Truck: %

    What is the correct accept/reject decision for this project?


Pulley: %

What is the correct accept/reject decision for this project?

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 2 years ago
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