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NPVs, IRRs, and MIRRs for Independent Projects

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:

YearTruckPulley1$5,100$7,50025,1007,50035,1007,50045,1007,50055,1007,500

Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Use a minus sign to enter negative values, if any.

Truck Pulley

Value Value

IRR  %- IRR%



 

 NPV$    NPV$        


    



 MIRR  %- MRR%

Top Answer

Truck: Accept since NPV is positive IRR=14.99% NPV=... View the full answer

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