Question
Q Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for
Q Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment:
| Current equipment | |
| Current sales value | $14,000 |
| Final sales value | 3,450 |
| Operating costs | 68,080 |
| New equipment | |
| Purchase cost | $164,000 |
| Final sales value | 3,450 |
| Operating cost savings | 32,450 |
The current and new equipment will last for 6 years. If Q Company replaces the current equipment, what is the approximate internal rate of return?
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
