X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment:

Question:

The current and new equipment will last for 6 years. If X Company replaces the current equipment, what is the approximate internal rate of return? (enter your rate as a decimal; so 1% would be .01)

Current equipment Current sales value Final sales value Operating costs $10,000 2,640 62,350 New equipment Purchase cost Final sales value Operating cost savings $160,000 2,640 32,450