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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: $12,000, Final sales value: 3,430, Operating costs: 62,710
New equipment: Purchase cost: $162,000, Final sales value: 3,430, Operating cost savings: 29,550.
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?
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