Year
1
2
3
4
5
+
Parrish Engineering is considering including two pieces of equipment, a truck and an
overhead pulley system, in this year's capital budget. The projects are not mutually
exclusive. The cash outlay for the truck is $17,350, and that for the pulley system is
$24,225. The firm's cost of capital is 15%. After tax cash flows, including depreciation,
are as follows:
Truck
$5,300
5,300
5,300
5,300
5,300
Pulley
$8,100
8,100
8,100
8,100.
8,100
Calculate the IRR and NPV for each project, and indicate the correct accept/reject
decision for each.