Applecross Dental Services is investigating expanding its operations by acquiring additional teeth cleaning equipment. The equipment would cost $150,000 and management has estimated that it would result in net cash inflows of $15,000 per year. The equipment would have a 15-year useful life with an expected salvage value of $15,000.

Required:
Ignore income taxes.
1. Compute the equipment's IRR rounded to one decimal place.
2. Assume that instead of $15,000, the salvage value in 15 years for the new equipment will be $0. Compute the IRR under this new assumption. Why does the new IRR differ so little from the value calculated in requirement 1?