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ome Security Systems is analyzing the purchase of manufacturing equipment that will cost $50,000. The annual cash inflows for the next three years will be:

ome Security Systems is analyzing the purchase of manufacturing equipment that will cost $50,000. The annual cash inflows for the next three years will be:

Year

Cash Flow

1

$25,000

2

23,000

3

18,000

A.) Determine the internal rate of return using interpolation.

B.) With a cost of capital of 18 percent, should the machine be purchased?

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