{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

FI515_Homework5_BrianLin - Brian Lin D01278742 Week 5...

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

View Full Document Right Arrow Icon
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
Image of page 1

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

View Full Document Right Arrow Icon
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.)
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    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.

    Student Picture

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

  • Left Quote Icon

    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.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    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.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern