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Calculated the IRR (internal rate of return) please. Thanks! Aikmen Lab plans to purchase a new centrifuge machine for its British Columbia facility. The machine
Calculated the IRR (internal rate of return) please. Thanks!
Aikmen Lab plans to purchase a new centrifuge machine for its British Columbia facility. The machine costs $94,000 and is expected to have a useful life of six years, with a terminal disposal value $9,000. Savings in cash operating costs are expected to be $24,900 per year. However, additional working capital is needed to keep the machine running efficiently. The working capital must continually be replaced, so an investment of $4,000 needs to be maintained at all times, but this investment is fully recoverable (will be "cashed in") at the end of the useful life. Aikmen Lab's require rate of return is 12%. Ignore income taxes in your analysis. Assume all cash flows occur at year-end except for initial investment amounts. (Click the icon to view the present value factor table.) 'Click the icon to view the present value annuity factor table.) Requirement 1. Calculate net present value. (Round amounts to the nearest whole dollar.) Requirement 2. Calculate internal rate of return. Use a trial-and-error approach and straight-line interpolation as necessary. The IRR (internal rate of return) is \%. (Round all present value calculations to the nearest whole dollar and round the IRR to two decimal places, X.XXX%.)
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