Intermediate: IRR calculation A machine with a purchase price of 14000 is estimated to eliminate manual operations
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Intermediate: IRR calculation A machine with a purchase price of £14000 is estimated to eliminate manual operations costing £4000 per year. The machine will last five years and have no residual value at the end of its life. You are required to calculate:
(a) the discounted cash flow (DCF) rate of return;
(b) the level of annual saving necessary to achieve a 12% DCF return;
(c) the net present value if the cost of capital is 10%.
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