Question
Based on the data presented in the Spreadsheet below (IRR tab), calculate the internal rate of return (IRR) for the new equipment purchase. Complete your
Based on the data presented in the Spreadsheet below (IRR tab), calculate the internal rate of return (IRR) for the new equipment purchase.
Complete your calculations by filling in the highlighted cells, Discuss if you think the cookie business should accept or reject the purchase of the new equipment and why.
Additional information has come to your attention regarding the equipment purchase. One of the partner's brother owns the company that sells the equipment and insists the equipment is needed. Discuss any ethical concerns you see with this type of transaction.
As the owner of the Cookie Business, you are considering the following investment: | ||||
Purchase of new equipment | $ 250,000.00 | |||
Expected annual increase in sales | $ 48,017.50 | |||
Time frame | 7 | years | ||
Acceptable rate needed | 9% | |||
Calculate the Internal Rate of Return: | ||||
PV of annuity factor | ||||
Internal rate of return | ||||
Accept or reject |
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