A new machine that costs $202,686 is expected to save annual cash operating costs of $44,000 over each of the next nine years. Using the tables that follow, the machine's internal rate of return is:

Future Value of $1
Periods		4%		6%		8%		10%		12%		14%		16%		18%		20%
1		1.040		1.060		1.080		1.100		1.120		1.140		1.160		1.180		1.200
2		1.082		1.124		1.166		1.210		1.254		1.300		1.346		1.393		1.440
3		1.125		1.191		1.260		1.331		1.405		1.482		1.561		1.643		1.728
4		1.170		1.263		1.361		1.464		1.574		1.689		1.811		1.939		2.074
5		1.217		1.338		1.469		1.611		1.762		1.925		2.101		2.288		2.488
6		1.265		1.419		1.587		1.772		1.974		2.195		2.437		2.700		2.986
7		1.316		1.504		1.714		1.949		2.211		2.502		2.827		3.186		3.583
8		1.369		1.594		1.851		2.144		2.476		2.853		3.279		3.759		4.300
9		1.423		1.690		1.999		2.359		2.773		3.252		3.803		4.436		5.160
10		1.480		1.791		2.159		2.594		3.106		3.707		4.412		5.234		6.192

Future Value of a Series of $1 Cash Flows
Periods		4%		6%		8%		10%		12%		14%		16%		18%		20%
1		1.000		1.000		1.000		1.000		1.000		1.000		1.000		1.000		1.000
2		2.040		2.060		2.080		2.100		2.120		2.140		2.160		2.180		2.220
3		3.122		3.184		3.246		3.310		3.374		3.440		3.506		3.572		3.640
4		4.247		4.375		4.506		4.641		4.779		4.921		5.067		5.215		5.368
5		5.416		5.637		5.867		6.105		6.353		6.610		6.877		7.154		7.442
6		6.633		6.975		7.336		7.716		8.115		8.536		8.977		9.442		9.930
7		7.898		8.394		8.923		9.487		10.089		10.730		11.414		12.142		12.916
8		9.214		9.898		10.637		11.436		12.300		13.233		14.240		15.327		16.499
9		10.583		11.491		12.488		13.580		14.776		16.085		17.519		19.086		20.799
10		12.006		13.181		14.487		15.938		17.549		19.337		21.321		23.521		25.959

Present Value of $1
Periods		4%		6%		8%		10%		12%		14%		16%		18%		20%
1		0.962		0.943		0.926		0.909		0.893		0.877		0.862		0.847		0.833
2		0.925		0.890		0.857		0.826		0.797		0.769		0.743		0.718		0.694
3		0.889		0.840		0.794		0.751		0.712		0.675		0.641		0.609		0.579
4		0.855		0.792		0.735		0.683		0.636		0.592		0.552		0.516		0.482
5		0.822		0.747		0.681		0.621		0.567		0.519		0.476		0.437		0.402
6		0.790		0.705		0.630		0.564		0.507		0.456		0.410		0.370		0.335
7		0.760		0.665		0.583		0.513		0.452		0.400		0.354		0.314		0.279
8		0.731		0.627		0.540		0.467		0.404		0.351		0.305		0.266		0.233
9		0.703		0.592		0.500		0.424		0.361		0.308		0.263		0.225		0.194
10		0.676		0.558		0.463		0.386		0.322		0.270		0.227		0.191		0.162

Present Value of a Series of $1 Cash Flows
Periods		4%		6%		8%		10%		12%		14%		16%		18%		20%
1		0.962		0.943		0.926		0.909		0.893		0.877		0.862		0.847		0.833
2		1.886		1.833		1.783		1.736		1.690		1.647		1.605		1.566		1.528
3		2.775		2.673		2.577		2.487		2.402		2.322		2.246		2.174		2.106
4		3.630		3.465		3.312		3.170		3.037		2.914		2.798		2.690		2.589
5		4.452		4.212		3.993		3.791		3.605		3.433		3.274		3.127		2.991
6		5.242		4.917		4.623		4.355		4.111		3.889		3.685		3.498		3.326
7		6.002		5.582		5.206		4.868		4.564		4.288		4.039		3.812		3.605
8		6.733		6.210		5.747		5.335		4.968		4.639		4.344		4.078		3.837
9		7.435		6.802		6.247		5.759		5.328		4.946		4.607		4.303		4.031
10		8.111		7.360		6.710		6.145		5.650		5.216		4.833		4.494		4.192

Multiple Choice

• approximately 12%.

• approximately 18%.

• approximately 14%.

• None of the answers is correct.

• approximately 16%.