Question

A company is considering investing in a new machine that requires a cash payment of $43,158 today. The machine will generate annual cash flows of $17,050 for the next three years.

What is the internal rate of return if the company buys this machine? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Amount Invested Present Value Annual Net Cash Flow = Factor Amount Invested Annual Net Cash Flow - Factor Internal Rate of Re

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Answer #1

Calculate IRR

Amount invested / Annual net cash flow = Present value of factor
43158 / 17050 = 2.53126
IRR = 9%
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