Davidson Doors is considering an equipment investment that will cost $930,000. Projected net cash inflows over the equipment's three-year life are as follows: Year 1: $504,000; Year 2: $398,000; and Year 3: $304,000. Davidson wants to know the equipment's IRR.

Requirement Use trial and error to find the IRR within a 2% range. (Hint: Use Davidson's hurdle rate of 12% to begin the trial-and-error process.) Use a business calculator or spreadsheet to compute the exact IRR.

Begin by calculating the NPV at three rates: 12%, 14%, and 16%.