Given the following data (Ignore income taxes.): Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.
The life of the equipment must be:

Question

Given the following data (Ignore income taxes.):  Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.
The life of the equipment must be:

Quizplus · Accepted Answer

Factor of the internal rate of return = Investment required ÷ Annual net cash inflow
= $48,680 ÷ $10,000 = 4.868
Looking down the 10% column on the table for the Present Value of an Annuity, 4.868 is the present value of a 7 year annuity. Therefore, the life of the equipment must be 7 years.

Given the Following Data (Ignore Income Taxes