Genuine Products Inc.requires a new machine.Two companies have submitted bids,and you have been assigned to the task of choosing one of the machines.Cash flow analysis indicates the following:

What is the internal rate of return for each machine?

Question

Genuine Products Inc.requires a new machine.Two companies have submitted bids,and you have been assigned to the task of choosing one of the machines.Cash flow analysis indicates the following:

What is the internal rate of return for each machine?

Quizplus · Accepted Answer

Using a financial calculator: Machine A - CF0 = -2,000, C01 = 0, F01 = 3, C02 = 3,877, F02 = 1, IRR CPT = 18%Machine B - CF0 = -2,000, C01 = 832, F01 = 4, IRR CPT = 24%