{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

FI515_Homework5_BrianLin

# FI515_Homework5_BrianLin - Brian Lin D01278742 Week 5...

This preview shows pages 1–3. Sign up to view the full content.

Brian Lin D01278742 Week 5 Homework Chapter 10 Questions Problem 10-8 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 \$17,100 and that for the pulley system is \$22,430. 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 Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept-reject decision for each. Year Truck Present Value 0 (17,100) 1 \$5,100 \$4,473.68 2 \$5,100 \$3,924.28 3 \$5,100 \$3,442.35 4 \$5,100 \$3,019.61 5 \$5,100 \$2,648.78 NPV Truck = \$408.71 IRR Truck = 14.99% MIRR Truck = 14.54% Accept Year Pulley Present Value 0 (22,430) 1 \$7,500 \$6,578.95 2 \$7,500 \$5,771.01 3 \$7,500 \$5,062.29 4 \$7,500 \$4,440.60 5 \$7,500 \$3,895.26 NPV Pulley = \$3,318.11 IRR Pulley = 20.00% MIRR Pulley = 17.19% Accept

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Problem 10-9 Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.)
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern