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Carter Industries has no debt or preferred stock⎯it uses onl…

Carter Industries has no debt or preferred stock⎯it uses only equity capital, and has two equally-sized divisions. Division A’s cost of capital is 9.0%, Division B’s cost is 13.0%, and the corporate (composite) WACC is 11.0%. All of Division A’s projects are equally risky, as are all of Division B’s projects. However, the projects of Division A are less risky than those of Division B. Which of the following projects should the firm accept?                                                                                                    

3. Edelman Engineering is considering including two pieces o…

3. 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: (12’) 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 NPV, the IRR, the MIRR, the PI, and the payback period for each project. Which should actually be selected?

3. Edelman Engineering is considering including two pieces o…

3. 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: (12’) 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 NPV, the IRR, the MIRR, the PI, and the payback period for each project. Which should actually be selected?