An industrial machine costing $10,000 will produce net cash savings of $4,000 per year. The machine has

Question:

An industrial machine costing $10,000 will produce net cash savings of $4,000 per year. The machine has a five-year useful life but must be returned to the factory for major repairs after three years of operation. These repairs cost $5,000. The company's is 10% per year. What IRR will be earned on the purchase of this machine? Analyze the sensitivity of IRR to ±$2,000 changes in the repair cost.
MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...