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Garrett Boone, Ayayai Enterprises' vice president of operations, needs to replace an automatic lathe on the production line. The model he is considering has a sales price of $ 201,868 and will last for 15 years. It will have no salvage value at the end of its useful life. Garrett estimates the new lathe will reduce raw materials scrap by $ 20,000 per year. He also believes the lathe will reduce energy costs by $ 3,000 per year. If he purchases the new lathe, he will be able to sell the old lathe for $ 5,000.

a. (a) Calculate the lathe's internal rate of return. (Round answer to 0 decimal places, e.g. 25%.)

%

\fAPPENDIX 9.2 Present value of an annuity of $1 per period. Periods 5% 6% 7% 9% 10% 11% 12% 13 14% 16% 18% 20% 0,9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 1,8861 1,8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 1.6052 1.5656 1.5278 MAWNK 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4868 2.4437 2.4018 2.3612 2.3216 2.2459 2.1743 2.1065 3.6299 3.5460 3,4651 3.3872 3.3121 3.2397 3.1698 3.1024 3.0373 2.9745 2.9137 2.7982 2.6901 2.5857 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7907 3.6959 3.6048 3.5172 3.4331 3.2743 3.1272 2.9905 6 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.2305 4.1114 3.9975 3.8887 3.6847 3.4976 3.3255 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4.0386 3.8115 3.6045 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 5.1461 4.9676 4.7988 4.6389 4.3436 4.0776 3.8372 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.5370 5.3282 5.1317 4.9464 4.6065 4.3030 4.0310 10 8.1109 7.7217 * 7.3601 7.0236 6.7101 6.4177 6.1446 5.8892 5,6502 5.4262 5.2161 4.8332 4.4941 4.1925 11 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 6.2065 5.9377 5.6869 5.4527 5.0285 4.6560 4.3271 12 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.4924 6.1944 5.9176 5.6603 5.1971 4.7932 4.4392 13 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.7499 6.4235 6.1218 5.8424 5.3423 4.9095 45327 14 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.4675 5.0081 4.6105 5,0916 4.6755 15 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 7.1909 6.8109 6.4624 6.1422 5.5755 9.4466 8.8514 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.6685 5.1624 4.7296 16 11.6523 10.8378 10.1059 6.7291 6.3729 5.7487 5.2223 4.7746 17 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.5-488 7.1196 6.8399 6.4674 5.8178 5.2732 4.8122 18 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 7.2497 5.3162 4.8435 19 13.1339 120853 11.1581 10.3356 9.6036. 8.9501 8.3649 7.8393 7.3658 6.9380 6.5504 5.8775 12 4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 7,0248 6.6231 5.9268 5.3527 4.5696 20 13.5903 $1 (1+ 1) PVARI=