(Ignore income taxes in this problem. )Mongon Roofing is considering the purchase of a crane that would cost $40,224,would have a useful life of 5 years,and would have no salvage value.The use of the crane would result in labor savings of $12,000 per year.The internal rate of return on the investment in the crane is closest to:

Question

Quizplus · Accepted Answer

Factor of the internal rate of return = Investment required F1F1F1S1F1F1F10 Annual net cash inflow
= $40,224 F1F1F1S1F1F1F10 $12,000 = 3.352
The factor of 3.352 for 5 years represents an internal rate of return of 15%.

(Ignore Income Taxes in This Problem