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Auxa Corporation is considering the acquisition of a new machine that costs $149,040. The machine is expected to have a four-year service life and will
Auxa Corporation is considering the acquisition of a new machine that costs $149,040. The machine is expected to have a four-year service life and will produce annual savings in cash operating costs of $45,000. Auxa evaluates investments by using the internal rate of return and ignores income taxes.
Required: 1. What relationship holds true at the internal rate of return with respect to discounted cash inflows and discounted cash outflows in relation to net present value? 2. Compute the machine's internal rate of return.
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