Replacement Analysis:

Although the Chen Company's milling machine is old, it is still in relatively good working order and would last for another 5 years. It is inefficient compared to modern standards, though, and so the company is considering replacing it. The new milling machine, at a cost of $1,650 delivered and installed, would also last for 5 years and would produce after-tax cash flows (labor savings and depreciation tax savings) of $325 per year. It would have zero salvage value at the end of its life. The firm's WACC is 13.90%, and its marginal tax rate is 38.35%.

What is IRR?