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The mayor of Trenton is considering the purchase of a new computer system for the city's tax department. The system costs $88,000 and has an
The mayor of Trenton is considering the purchase of a new computer system for the city's tax department. The system costs $88,000 and has an expected life of five years. The mayor estimates the following savings will result if the system is purchased: Year Savings 1 $33,000 38,000 18, 000 UIAWN 19, 000 10, 060 What can be said about the computer system's internal rate of return if the net present value at 13% is positive? Trenton uses a 11% discount rate for capital-budgeting decisions. Multiple Choice O The Internal rate of return Is less than 11%. O The Internal rate of return must be less than 6%. O The Internal rate of return is between 11% and 13% O The Internal rate of return is greater than 13%. O There Is Insufficient information to make any Judgment about the Internal rate of return
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