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What initial cost of machine H will make the IRR for the two machines equal? Cost of Machine G ($1,625,000) Cost of Machine H ($1,750,000)
What initial cost of machine H will make the IRR for the two machines equal?
Cost of Machine G | ($1,625,000) | Cost of Machine H | ($1,750,000) | |||
Salvage value | 16% | of purchase value | Salvage value | 18% | of purchase value | |
First year cost | ($95,000) | First year cost | ($112,000) | |||
Inflation (all costs) | 6.00% | p y | Inflation (all costs) | 6.50% | p y | |
First year revenue | $475,000 | First year revenue | $500,000 | |||
Increase in revenue | 8% | p y | Increase in revenue | 10% | p y | |
Life of machine | 5 | years | Life of machine | 5 | years | |
Life of project | 20 | years | Life of project | 20 | years |
Group of answer choices
$479,095
$770,040
$730,419
$1,961,354
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