Soda Manufacturing Company provides vending machines for soft-drink manufacturers. The company has been investigating a new piece of machinery for its production department. The old equipment has a remaining life of five years and the new equipment will cost $99,825 with a five-year life. The expected additional cash inflows are $25,000 per year. What is the internal rate of return?

Question

Quizplus · Accepted Answer

$99,825 = $25,000F
F = 3.993
Chart criteria for 5 years is 3.993 = 8%

Soda Manufacturing Company Provides Vending Machines for Soft-Drink Manufacturers