Locil Corporation recently purchased a new machine for $415,275 with a nine-year life.The old equipment has a remaining life of nine years and no disposal value at the time of replacement.Net cash flows will be $75,000 per year.What is the internal rate of return?
A) 11%
B) 16%
C) 20%
D) 24%

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of cash flows from an investment equal to zero. By calculating the IRR for the given cash flows ($75,000 per year for nine years) and initial investment ($415,275), the IRR is found to be approximately 11%.

Locil Corporation Recently Purchased a New Machine for $415,275 with a Nine-Year