Reference no: EM132559392

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

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

Truck: %

Question 2: What is the correct accept/reject decision for this project?

Select-

Accept

Reject

Pulley: %

Question 3: What is the correct accept/reject decision for this project?

Select-

Accept

Reject

Question 4: 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: $

Question 5: What is the correct accept/reject decision for this project?

Select-

Accept

Reject

Pulley: $

Question 6: What is the correct accept/reject decision for this project?

Select-

Accept

Reject

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

Truck: %

Question 7: What is the correct accept/reject decision for this project?

-Select-

Accept

Reject

Pulley: %

Question 8: What is the correct accept/reject decision for this project?

Select-

Accept

Reject