(Ignore income taxes in this problem.)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:

Question

Quizplus · Accepted Answer

Factor of the internal rate of return = Investment required ÷ Annual net cash inflow
= $33,165 ÷ $9,000 = 3.685
This factor is the present value of an annuity for 6 periods at 16% per period.

(Ignore Income Taxes in This Problem