Question

3. Scotty Manufacturing is considering the replacement of one of its machine tools. Three alternative replacement tools A, B, and C are under consideration. The cash flows associated with each are shown in the following table. The firm's cost of capital is 15 percent. 95,000 150,000 Initial Outflow Years 20,000 20.000 20,000 20,000 20,000 20,000 20,000 20,000 50,000 Cash Inflow 10,000 12.000 1 13,000 3 15,000 17,000 5 21,000 6 23,000 23,000 23,000 23,000 23,000 35.000 46,000 58,000 calculate the IRR of each tool, osing approx

Answer 1

In IRR we put Nov=0 اور زمان الزوا۔ ا رم و از د ایران اور اپل در O= - NPV - cto + + CEL (tim) + 22) + CF3 (Hig) cf2 (HIR (fy tcfs (HI) 4 (tings + CFG + Cfi t cfo (tir) 6 (Hir) 7 (Hiro JOOST OUO ES + TOO ES t god0 21 = (fe cash flow it) (rit) in internal rate of return. O t 0 € DOES + Tool A ( it) 03 - 95000 + 200vo + 200 + 2000 + 20000 CHiw) CHIN) 28 CHI) 3 (1H2) 4 oru the stat China By using a IRR financial Calculates. we get 13.299%. = Tool B -5ooot loost 1200o (tim) (lt ) 13000 (lt123 . t + L5 ou CITIN) 4 17ouot (HI) 5 21000 (tim) 6

3=VY DU By Using a financial Captilator me get TRR = 16.575.1.) 4+ Twit) Tool-c {( It! 1 - - Scrit 0 = - 15oooo + 23 ovo + 23 ovo + 230vo CHIM CHIR) 37 (Itin Motor Por n) m + 2300 + 23000 + 35000 + 4600 THIR) 4 (Itin) (tin)6 (At 127 ocott Soow aroos t D) (Itinject) voor toroap - lake By Using a get IRR financial Consulenter we 11:1651) o puro po