(Answered) 1 x co is considering replacing two pieces of equipment a

Finance

1. X Co. is considering replacing 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 $ 15,200 and that for the pulley system is $ 20,000. The firm's cost of capital is 14%. After-tax cash flows, including depreciation are as follows:

Year Truck Pulley

1 $ 5,300 $ 7,500

2 5,300 7,500

3 5,300 7,500

4 5,300 7,500

5 5,300 7,500

Calculate the IRR, NPV and the MIRR for each project, and indicate the accept-reject decision in each case.

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