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 | $16,000 |
| Final sales value | 2,550 |
| Operating costs | 66,610 |
| New equipment | |
| Purchase cost | $166,000 |
| Final sales value | 2,550 |
| 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?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Strategic Market Management
Authors: David A. Aaker
4th Edition
0471309567, 9780471309567
