In: Finance
10-8. 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 $39,500, and that for the pulley system is $94,800. The firm's cost of capital is 14%. After-tax cash flows, including depreciation, are as follows:
Year |
Truck |
Pulley |
1 |
$12,500 |
$31,000 |
2 |
12,500 |
31,000 |
3 |
12,500 |
31,000 |
4 |
12,500 |
31,000 |
5 |
12,500 |
31,000 |
Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each.