Question
A company purchase a piece of manufacturing equipment for an additional income. The expected income is $3,500 per semester. Its useful life is 9 years.
A company purchase a piece of manufacturing equipment for an additional income. The expected income is $3,500 per semester. Its useful life is 9 years. Expenses are estimated to be $500 semiannually. If the purchase price is $34,000 and there is a salvage value of $4,500, what is the prospective rate of return (IRR) of this investment? The MARR is 10% compounded semiannually.
| a. | IRR = 7% | |
| b. | IRR = 12% | |
| c. | IRR = 6% | |
| d. | IRR = 6.02% |
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Financial Accounting
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
9th Edition
1118334329, 978-1118334324
