The Aloha Company is considering the purchase of a piece of equipment. The following information is available:

{Required:}
(1) If the net present value method is used to evaluate the project, should the equipment be purchased?
(2) Compute the internal rate of return for the investment.

Transcribed Image Text:

The cost of the equipment. .$100,000 Annual net cash inflow expected from the use of the equipment.. Salvage value at the end of five years.......... 30,000 1,000 'The company's minimum desired rate of return is 12 percent.