Question
Games is considering an equipment investment that will cost $940,000. Projected net cash inflows over the equipment's three-year life are as follows: Year 1 $490,000:
Games is considering an equipment investment that will cost $940,000. Projected net cash inflows over the equipment's three-year life are as follows: Year 1 $490,000: ; Year 2 $398,000: ; and Year 3 $292000: . Games wants to know the equipment's IRR.
Requirement
Use trial and error to find the IRR within a 2% range.(Hint: Use Gammaro's hurdle rate of 10% 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: 10%, 12%, and 14%. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.
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