Question
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
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:
| Current equipment | |
| Current sales value | $10,000 |
| Final sales value | 2,180 |
| Operating costs | 62,010 |
| New equipment | |
| Purchase cost | $160,000 |
| Final sales value | 2,180 |
| Operating costs | 34,320 |
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]
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Financial Accounting In An Economic Context
Authors: Jamie Pratt
3rd Edition
0538855843, 978-0538855846
