(Ignore income taxes in this problem.)Given the following data: The life of the equipment must be:

Name: (Ignore income taxes in this problem.)Given the following data: The life of the equipment must be:
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Question

(Ignore income taxes in this problem.)Given the following data:  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.

(Ignore Income Taxes in This Problem