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Super Neat Snack Foods is thinking about an expansion. The manager is looking to buy a machine for $60,000, which would last 10 years,
Super Neat Snack Foods is thinking about an expansion. The manager is looking to buy a machine for $60,000, which would last 10 years, with a $10,000 disposal value at the end of 10 years. The manager expects this would increase cash revenues by $32,000 per year, with additional cash costs of $18,000. Since the machine would last 10 years, the manager will incur straight-line depreciation expense of $6,000 per year. Super Neat's cost of capital is 10%, and the company pays no taxes. What is the project's IRR? 25.0% 10.0% 20.1% 7.4% 19.4% 5.6%
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