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Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $92,000. The annual cash inflows for the next three years will be:
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $92,000. The annual cash inflows for the next three years will be: |
Year | Cash flow | |||
1 | $ | 41,000 | ||
2 | 39,000 | |||
3 | 34,000 | |||
(a) | Determine the internal rate of return using interpolation. Use Appendix B and Appendix D. (Round "PV Factor" and intermediate to 3 decimal places. Round final answer to 2 decimal places. Omit the "%" sign in your response.) |
Internal rate of return | % |
(b) | With a cost of capital of 10 percent, should the machine be purchased? | ||||
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