Considering including two pieces of equipment

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Reference no: EM13933487

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 $18,300, and that for the pulley system is $20,700. The firm's cost of capital is 10.25%. After-tax cash flows, including depreciation, are as follows:

Year Truck Pulley

1 $5,400 $8,000

2 $5,400 $8,000

3 $5,400 $8,000

4 $5,400 $8,000

5 $5,400 $8,000

a. Calculate NPV of truck project.

b. Calculate MIRR of truck project.

c. Calculate NPV and MIRR of pulley project.

SHOW YOUR WORK AND EXPLAIN YOUR ANSWER

Reference no: EM13933487

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