NPVs, IRRs, and MIRRs for Independent Projects Edelman Engineering is considering including two pieces of equipment, a...

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Finance

NPVs, IRRs, and MIRRs for Independent Projects
Edelman Engineering is considering including two pieces ofequipment, a truck and an overhead pulley system, in this year'scapital budget. The projects are independent. The cash outlay forthe truck is $17,100 and that for the pulley system is $22,430. Thefirm's cost of capital is 14%. After-tax cash flows, includingdepreciation, 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
Calculate the IRR for each project. Round your answers to twodecimal places.
Truck:  %

What is the correct accept/reject decision for this project?
-Select-AcceptRejectItem 2

Pulley:  %

What is the correct accept/reject decision for this project?
-Select-AcceptRejectItem 4

Calculate the NPV for each project. Round your answers to thenearest 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?
-Select-AcceptRejectItem 6

Pulley: $

What is the correct accept/reject decision for this project?
-Select-AcceptRejectItem 8

Calculate the MIRR for each project. Round your answers to twodecimal places.
Truck:  %

What is the correct accept/reject decision for this project?
-Select-AcceptRejectItem 10

Pulley:  %

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

Answer & Explanation Solved by verified expert

4.5 Ratings (950 Votes)

IRR0199991713Year012345Cash flow stream2243075007500750075007500Discounting factor111999921439981727964207354272488234Discounted cash flows project22430625004352084054340368361699813014186NPV Sumof discounted cash flowsNPV Pulley 446061E05WhereDiscounting factor 1 IRRCorresponding period in yearsDiscounted CashflowCash flowstreamdiscounting factorIRR20Acceptproject as IRR is more than discount ratecTruckDiscount rate014Year012345Cash flow stream1710051005100510051005100Discounting factor1114129961481544168896021925415Discounted cash flows project1710044736843924284344235530196094264878NPV Sumof discounted cash flowsNPV See Answer

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NPVs, IRRs, and MIRRs for Independent ProjectsEdelman Engineering is considering including two pieces ofequipment, a truck and an overhead pulley system, in this year'scapital budget. The projects are independent. The cash outlay forthe truck is $17,100 and that for the pulley system is $22,430. Thefirm's cost of capital is 14%. After-tax cash flows, includingdepreciation, are as follows:YearTruckPulley1$5,100$7,50025,1007,50035,1007,50045,1007,50055,1007,500Calculate the IRR for each project. Round your answers to twodecimal places.Truck: %What is the correct accept/reject decision for this project?-Select-AcceptRejectItem 2Pulley: %What is the correct accept/reject decision for this project?-Select-AcceptRejectItem 4Calculate the NPV for each project. Round your answers to thenearest 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?-Select-AcceptRejectItem 6Pulley: $ What is the correct accept/reject decision for this project?-Select-AcceptRejectItem 8Calculate the MIRR for each project. Round your answers to twodecimal places.Truck: %What is the correct accept/reject decision for this project?-Select-AcceptRejectItem 10Pulley: %What is the correct accept/reject decision for this project?

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