Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.65 million and create incremental cash flows of $577,321.00 each year for the next five years. The cost of capital is 11.60%. What is the internal rate of return for the J-Mix 2000?
Let irr be x%
At irr,present value of inflows=present value of outflows.
1,650,000=577321/1.0x+577321/1.0x^2+577321/1.0x^3+577321/1.0x^4+577321/1.0x^5
Hence x=irr=22.09%(Approx).
Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and...
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