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10-8 NPV, IRRs and MIRRs for Independent ProjectsEdelman Engineering is considering including two pieces of equipment, a truck and anover-head pulley system, in this year’s capital budget. The projects are independent. Thecash outlay for the truck is $17,100, and that for the pulley system is $22,430. The firm’scost of capital is 14%. After tax cash ﬂows, including depreciation, are included on thetable below:YearTruckPulley1$5,100$7,50025,1007,50035,1007,50045,1007,50055,1007,500Calculate the IRR, NPV, and PI for each project and indicate the correct accept/rejectdecision for each.Truck: (all done with a TI BA II)NPV=-17,100 + $5, 100 (PVIFA 14%, 5) = -$17,000 + $5,100(3, 4331) =-17, 100 + $17, 509 =$409IRR=15% Accept this decisionMIRR = N = 5, PV= 17,100, PMT=0, FV-33712I=14.54% Accept this decisionPulley: (all done with TI BA II)NPV=-$22,430 + $7,500(343310) = -22, 430 + $25, 748= $3318IRR=20%MIRR: PV Costs=$22, 430N=5, I=14, PV=0, PMT=7500, FV=$49, 576I=17.9% Accept this decisionThe decision is to accept both projects only if the firm didn’t face a capital rationing situation. Ifthe firm was capital rationed (and could only choose one project), then choose the pulley.