Medina Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the company’s cash outflow for operating expenses by \($1,280,000\) per year.

The cost of the equipment is \($6,186,530.56\) . Medina expects it to have a 10-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 15 percent and uses the straight-line method for depreciation.

Required

a. Calculate the internal rate of return of the investment opportunity.

b. Indicate whether the investment opportunity should be accepted.