What is the Delta IRR of the difference between the cashflow of the machinewith the higher initial
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What is the Delta IRR of the difference between the cashflow of the machinewith the higher initial value and the lower initial value withthe following data? Benefits are constant over all years.
Machine A Machine B
Initial cost $125,000 $175,000
Life in years 3 6
Salvage after life 15% 15%
Benefits per year $72,000 $81,000
Costs per year $15,800 $24,200
Inflation 2.50%
Costs keep increasing at 2.5% every year even when a new machine is bought.
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