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NPVs, IRRs, and MIRRs for Inde

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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 $19,000, and that for the pulley system is $20,000. The firm’s cost of capital is 12%. 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. 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 Decision   Value Decision
IRR   % -Select-AcceptRejectItem 2     % -Select-AcceptRejectItem 4
NPV $            -Select-AcceptRejectItem 6   $            -Select-AcceptRejectItem 8
MIRR   % -Select-AcceptRejectItem 10     % -Select-AcceptRejectItem 12

 
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