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Montalban, Inc. is considering a capital investment (equipment) costing $75,000 with a 6-year useful life, and equal annual cash flows. The equipment has a net
Montalban, Inc. is considering a capital investment (equipment) costing $75,000 with a 6-year useful life, and equal annual cash flows. The equipment has a net present value, $2,198, calculated at 10%. Use the following table:
---------Present Value of an Annuity of 1
Years----8%-------9%-------10%------11%-----12%-----14%
---6---- 4.623----4.486---- 4.355---- 4.231----4.111----3.889
a) Calculate the Present Value Factor for an Annuity for this investment.
b) Determine the Internal Rate of Return (IRR) of this investment.
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