Excaliber is considering the acquisition of a $393,360 machine that is expected to produce annual savings in cash operating costs of $80,000 over the next six years. If Excaliber uses the internal rate of return (IRR) to evaluate new investments and the company has a hurdle rate of 8%, which of the following statements is correct, using the tables that follow?

Future Value of $1Periods4%6%8%10%12%14%16%18%20%11.0401.0601.0801.1001.1201.1401.1601.1801.20021.0821.1241.1661.2101.2541.3001.3461.3931.44031.1251.1911.2601.3311.4051.4821.5611.6431.72841.1701.2631.3611.4641.5741.6891.8111.9392.07451.2171.3381.4691.6111.7621.9252.1012.2882.48861.2651.4191.5871.7721.9742.1952.4372.7002.98671.3161.5041.7141.9492.2112.5022.8273.1863.58381.3691.5941.8512.1442.4762.8533.2793.7594.30091.4231.6901.9992.3592.7733.2523.8034.4365.160101.4801.7912.1592.5943.1063.7074.4125.2346.192

Future Value of a Series of $1 Cash FlowsPeriods4%6%8%10%12%14%16%18%20%11.0001.0001.0001.0001.0001.0001.0001.0001.00022.0402.0602.0802.1002.1202.1402.1602.1802.22033.1223.1843.2463.3103.3743.4403.5063.5723.64044.2474.3754.5064.6414.7794.9215.0675.2155.36855.4165.6375.8676.1056.3536.6106.8777.1547.44266.6336.9757.3367.7168.1158.5368.9779.4429.93077.8988.3948.9239.48710.08910.73011.41412.14212.91689.2149.89810.63711.43612.30013.23314.24015.32716.499910.58311.49112.48813.58014.77616.08517.51919.08620.7991012.00613.18114.48715.93817.54919.33721.32123.52125.959

Present Value of $1Periods4%6%8%10%12%14%16%18%20%10.9620.9430.9260.9090.8930.8770.8620.8470.83320.9250.8900.8570.8260.7970.7690.7430.7180.69430.8890.8400.7940.7510.7120.6750.6410.6090.57940.8550.7920.7350.6830.6360.5920.5520.5160.48250.8220.7470.6810.6210.5670.5190.4760.4370.40260.7900.7050.6300.5640.5070.4560.4100.3700.33570.7600.6650.5830.5130.4520.4000.3540.3140.27980.7310.6270.5400.4670.4040.3510.3050.2660.23390.7030.5920.5000.4240.3610.3080.2630.2250.194100.6760.5580.4630.3860.3220.2700.2270.1910.162

Present Value of a Series of $1 Cash FlowsPeriods4%6%8%10%12%14%16%18%20%10.9620.9430.9260.9090.8930.8770.8620.8470.83321.8861.8331.7831.7361.6901.6471.6051.5661.52832.7752.6732.5772.4872.4022.3222.2462.1742.10643.6303.4653.3123.1703.0372.9142.7982.6902.58954.4524.2123.9933.7913.6053.4333.2743.1272.99165.2424.9174.6234.3554.1113.8893.6853.4983.32676.0025.5825.2064.8684.5644.2884.0393.8123.60586.7336.2105.7475.3354.9684.6394.3444.0783.83797.4356.8026.2475.7595.3284.9464.6074.3034.031108.1117.3606.7106.1455.6505.2164.8334.4944.192

Multiple Choice

• The machine's IRR is approximately 6%, and the machine should not be acquired.
• All of the statements are false.
• The machine's IRR is approximately 6%, and the machine should be acquired.
• The machine's IRR is less than 4%, and the machine should not be acquired.
• The machine's IRR is approximately 8%, and the machine should be acquired.