Crockin Corporation is considering a machine that will save $9,000 a year in cash operating costs each year for the next six years. At the end of six years it would have no salvage value. If this machine costs $33,165 now, the machine's internal rate of return is closest to (Ignore income taxes.):Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.

Question

Quizplus · Accepted Answer

The internal rate of return is closest to 16%. This is because the present value of the cash inflows from the machine is equal to the cost of the machine when the discount rate is 16%.

Crockin Corporation Is Considering a Machine That Will Save $9,000