The Pearce Club, Inc., is considering investing in an exercise machine that costs $5,000 and would increase

Question:

The Pearce Club, Inc., is considering investing in an exercise machine that costs $5,000 and would increase revenues by $1,500 a year for five years. The machine would be depreciated using the straight-line method over its useful life and have no .

Required
Use Excel to calculate the equipment’s internal rate of return. Assume that the tax rate is 30 percent. Round your answer to two decimals.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...