NPV, IRR, MIRR

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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

a. 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?

b. 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?

c. 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?

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