FIN515_Homework5_Michael_Anderson - 10-8 Year Truck Cash Outlay Pulley 5,100 7,500 5,100 7,500 4 5,100 7,500 5 MIRRt=-17100

FIN515_Homework5_Michael_Anderson - 10-8 Year Truck Cash...

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10-8 Year Truck Pulley Cash Outlay -17100 -22430 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 WACC 0.14 15070 NPVt=NPV(.14, 5100,5100,5100,5100,5100)+- 17100/NPVp=NPV(.14,7500,7500,7500,7500,7500)+-22430 $408.71 $3,318.1 1 IRRt =IRR(-17100, 5100,5100,5100,5100,5100, 10%)/IRRp =IRR(- 2243,7500,7500,7500,7500,7500, 10%) 15% 20% MIRRt=((-17100, 5100,5100,5100,5100,5100, .15,.14)/ MIRRp (- 2243,7500,7500,7500,7500,7500, .2,.14) 14.54% 17.19% Both projects have IRR’s over the WACC rate so they both can be accepted. If you had to choose one over the other you would pick the Pulley system because the IRR is higher.
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10-9 Gas powered - NPV=-17500 + 1000 ( 343310=-22430 + 25748=3861 N = 5 I = 12 PMT = 1000 FV =
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  • Spring '10
  • Unknown
  • Generally Accepted Accounting Principles, 8 year, Equip. Original Cost, $3,318.1 1 15, $408.71, 3,318.1 1 15%

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