Question

You buy a new piece of equipment for $28,192, and you receive a cash inflow of...

You buy a new piece of equipment for $28,192, and you receive a cash inflow of $4,500 per year for 16 years. Use Appendix D for an approximate answer but calculate your final answer using the financial calculator method.


What is the internal rate of return?

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Answer #1
0 -28192
1 4500
2 4500
3 4500
4 4500
5 4500
6 4500
7 4500
8 4500
9 4500
10 4500
11 4500
12 4500
13 4500
14 4500
15 4500
16 4500
IRR =IRR(B1:B17)
= 14.00%
IRR is the rate at which Net Present Value is zero.
B1:B17 is the range of cash flows from year 0 to 16.
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