Figure 6
JD, Inc., is considering the purchase of production equipment that costs £400,000. The equipment is expected to generate annual cash inflows of £125,000. The equipment is expected to have a useful life of five years with no salvage value. The firm's cost of capital is 12 percent.
-Refer to Figure 6. JD's approximate internal rate of return of the project is

Question

Quizplus · Accepted Answer

The approximate IRR is 17% because the NPV is positive at a discount rate of 17% and negative at a discount rate of 18%.

Figure 6 JD, Inc., Is Considering the Purchase of Production Equipment That