Question
I need help with the following homework problem. How would I set it up? Carlo Company is considering acquiring a machine that costs $40,000 and
I need help with the following homework problem. How would I set it up? Carlo Company is considering acquiring a machine that costs $40,000 and that promises to save $8,000 in cash outlays per year, after taxes, at the end of each of the next 12 years. Carlo expects the new machine to have no salvage value at the end of its useful life. a. Compute the internal rate of return for this project. b. Compute the internal rate of return, assuming that the cash savings were to last only six, instead of 12, years. c. Compute the internal rate of return, assuming that the cash saving were to last 20 years rather than 12 years. D. Compute the internal rate of return , assuming that the cash savings would be $6000 rather than $8,000 per year for 12 years.
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