Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $396,550 and will...
Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $396,550 and will generate $110,000 per year for 5 years. Calculate the IRR for this piece of equipment.
Homework Answers
Let irr be x%
At irr,present value of inflows=present value of outflows.
396,550=110000/1.0x+110000/1.0x^2+...............+110000/1.0x^5
Hence x=irr=12%(Approx).
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