Internal Rate of Return Analysis. Wood Products Company would like to purchase a computerized wood lathe for $100,000. The machine is expected to have a life of 5 years, and a salvage value of $5,000. Annual maintenance costs will total $20,000. Annual net cash receipts resulting from this machine are predicted to be $45,000. The company's required rate of return is 15 percent.

Required:

a. Use trial and error to approximate the internal rate of return for this investment proposal.

b. Should the company purchase the wood lathe? Explain.