Question
7....Garrett Boone,BridgeportEnterprises' vice president of operations, needs to replace an automatic lathe on the production line. The model he is considering has a sales price
7....Garrett Boone,BridgeportEnterprises' vice president of operations, needs to replace an automatic lathe on the production line. The model he is considering has a sales price of $233,282and will last for15years. It will have no salvage value at the end of its useful life. Garrett estimates the new lathe will reduce raw materials scrap by $24,000per year. He also believes the lathe will reduce energy costs by $6,000per year. If he purchases the new lathe, he will be able to sell the old lathe for $5,100.
(a) Calculate the lathe's internal rate of return. (Round answer to 0 decimal places, e.g. 25%.)
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