Perez Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the companys cash outflow for operating expenses by $1,286,000 per year. The cost of the equipment is $6,466,836.18. Perez expects it to have a 11-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 15 percent and uses the straight-line method for depreciation. (PV of $1 and PVA of $1)

Note: Use appropriate factor(s) from the tables provided.

Required

Calculate the internal rate of return of the investment opportunity.

Note: Do not round intermediate calculations.

Indicate whether the investment opportunity should be accepted.

a. initial rate of return
bshould the investment opportunity be accepted