Question
Joe Flubup is the president of Flubup, Inc. He is considering buying a new machine that would cost $25,470. Joe has determined that the new
Joe Flubup is the president of Flubup, Inc. He is considering buying a new machine that would cost $25,470. Joe has determined that the new machine promises an internal rate of return of 14%, but Joe has misplaced the paper which tells the annual cost savings promised by the new machine. He does remember that the machine has a projected life of 12 years. Based on these data, what are the annual cost savings to the nearest dollar? (Ignore income taxes in this problem.)
A) Impossible to determine from the data given.
B) $2,122.50
C) $4,500.00
D) $4,650.00
I know the answer is $4500 but I do not know how that was accomplished.
I am having a problem trying to figure out this question? I need help!!!
Thanks,
Tanya
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