RealTurf is considering purchasing an automatic sprinkler system for its sod farm by borrowing the entire $45,000 purchase price. The loan would be repaid with four equal annual payments at an interest rate of 12%/year. It is anticipated that the sprinkler system would be used for 9 years and then sold for a salvage value of $5,000. Annual operating and maintenance expenses for the system over the 9-year life are estimated to be $9,000 per year. If the new system is purchased, cost savings of $21,000 per year will be realized over the present manual watering system. RealTurf uses a MARR of 15%/year for economic decision making.

Rea Turf s considering purchasing an automatic surir kler system or its sod arrn by burro ng he entire $45 000 purchase price. The luen would be repaid wiU1 uur equal annual payments a an in eres 'ate o 12% vedl is ari cipated that the sprinkler system ould be used for 9 years arnd then sold for a selvage value of s5,000. Annual operating and maintenance expenses for the system over Lhe 9-year life are estimated to be $9,000 per year. If Lhe new systen is purchased, cost savigs of s21,000 per year will be realized over the presernt manual watering systn. RealTurf uses a MARR of 15year for economic detision makirng. 90. nnual opeia deision m % MARR f 1000s stem is purchasof Show the internal rate of return used to reach your decision: Based on an internal rate of return analysis, is the purchase of the new sprinkler system economically attractive Carry all interim colculations to 5 decimal places and then round your final answer to 1 declmal place. The tolerance Is t .2