Excel Analytics 14-1 (Algo) Internal Rate of Return [LO14-2, LO14-3] Skip to question Eisner Company has an opportunity to manufacture and sell a new product for a five-year period. The company estimated the following costs and revenues for the new product: Cost of new equipment $ 420,000 Initial working capital required $ 125,000 Overhaul of the equipment after three years $ 50,000 Salvage value of the equipment after five years $ 30,000 Annual revenues and costs: Sales $ 850,000 Variable expenses $ 500,000 Fixed out-of-pocket operating costs $ 193,000 When the project concludes in five years the working capital will be released for investment elsewhere in the company.

Required: 1. One method for computing the internal rate of return relies on computing the factor of the internal rate of return as shown below:

Factor of the internal rate of return	=	Investment required
Annual net cash inflow

Can this equation be used to calculate the internal rate of return for Eisner Company? Why?