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Assume that a company is considering buying a new piece of equipment for $240,000 that would have a useful life of five years and no
Assume that a company is considering buying a new piece of equipment for $240,000 that would have a useful life of five years and no salvage value. The equipment would generate the following estimated annual revenues and expenses:
Revenues | $ 134,800 | |
---|---|---|
Less operating expenses: | ||
Commissions | $ 15,000 | |
Insurance | 5,000 | |
Depreciation | 48,000 | |
Maintenance | 30,000 | 98,000 |
Net operating income | $ 36,800 |
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The internal rate of return for this investment is closest to:
Multiple Choice
25%.
21%.
27%.
23%.
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