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USE THE FOLLOWING INFORMATION FOR QUESTIONS 4-8 Happy Company is considering the purchase of a new machine that would cost $120,000. The machine would have
USE THE FOLLOWING INFORMATION FOR QUESTIONS 4-8 Happy Company is considering the purchase of a new machine that would cost $120,000. The machine would have a useful life of 6 years. Happy Company plans on using straight-line depreciation with an estimated salvage value of $0. Happy Company has a hurdle rate of 8% and is subject to an income tax rate of 60%. The annual cash income is estimated to be $40,000. PV TABLES CAN BE FOUND ON PAGE 13. 8. Using interpolation, the Internal Rate of Return (IRR) is: A. 9.57% B. 11.57% C. 12.57% D. 13.57% E. 10.57%
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