Question
The Tool Box needs to purchase a new machine costing $1.46 million. Management is estimating the machine will generate cash inflows of $223,000 the first
The Tool Box needs to purchase a new machine costing $1.46 million. Management is estimating the machine will generate cash inflows of $223,000 the first year and $600,000 for the following three years. If management requires a minimum 12 percent rate of return, should the firm purchase this particular machine based on its IRR? Why or why not?
Yes, because the IRR is 10.75 percent
Yes, because the IRR is 12.74 percent
No, because the IRR is 10.75 percent
No, because the IRR is 12.74 percent
The answer cannot be determined as there are multiple IRRs
Please show the solution
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