A company is considering purchasing equipment costing

$120,000.

The equipment is expected to reduce costs from year 1 to

3

by

$35,000,

year

4

to

7

by

$15,000,

and in year

8

by

$5,000.

In year

8,

the equipment can be sold at a salvage value of

$23,000.

Calculate the internal rate of return (IRR) for this proposal.