Reference no: EM132787437
Parrish Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are not mutually exclusive. The cash outlay for the truck is $17,350, and that for the pulley system is $24,225. The firm's cost of capital is 15%.
After-tax cash flows are as follows:
YEAR. TRUCK. PULLEY
1. $5,300. $8,100
2 5,300 8,100
3 5,300 8,100
4 5,300 8,100
5 5,300 8,100
Problem 1: Calculate the IRR and NPV for each project, and indicate the correct accept/reject decision for each.