week5 hwk f1515 - My Project Homework Assignment Week 5...

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My Project Homework Assignment Week 5 10-8 NPV IRRs and MIRRs for Independent Projects Edelmann 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, 000 and that for the pulley system is 22, 430. The firm’s cost of capital is 14%. Calculate the IRR, the NPV, and the MIRR for ech project, and indicate the correct accept-reject decision for each. Truck: NPV=-17,100 + \$5, 100 (PVIFA14%, 5) = -\$17,000 + \$5,100(3,4331)=-17, 100 + \$17, 509 =409-Accept IRR=15% MIRR=N=5, PV= 17,100, PMT=0, FV-33712 I=14.54% Accept Pulley NPV=-\$22,430 + \$7, 500(343310=-22, 430 + \$25, 748=\$3318 IRR=20% MIRR: PV Costs=\$22, 430 N=5, I=14, PV=0, PMT=7500, FV=\$49, 576 I=17.9% Accept 10-9-NPvs and IRRs for Mutually Exclusive Projects 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

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week5 hwk f1515 - My Project Homework Assignment Week 5...

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