Question
I need help solving this question please Imagine Co. is considering investing $67,938 in a new machine. The following data is available. The new machine
I need help solving this question please
Imagine Co. is considering investing $67,938 in a new machine. The following data is available.
- The new machine would require 4 fewer hours of direct labor per day.
- Direct labor is $15 per hour.
- There are 260 operating days in the year.
- The estimated life of the new machine is 6 years.
- Imagine Corporations minimum rate of return is 11%.
Present Value of an Annuity of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 1.833 1.736 1.690 1.626 1.528
3 2.673 2.487 2.402 2.283 2.106
4 3.465 3.170 3.037 2.855 2.589
5 4.212 3.791 3.605 3.353 2.991
6 4.917 4.355 4.111 3.785 3.326
7 5.582 4.868 4.564 4.160 3.605
8 6.210 5.335 4.968 4.487 3.837
9 6.802 5.759 5.328 4.772 4.031
10 7.360 6.145 5.650 5.109 4.192
Instructions
Prepare (a) a detailed calculation of the IRR for the proposed investment in the new machine
(b) a very brief recommendation as to whether the new investment should be made.
MUST SHOW ALL YOUR WORK!
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