(Ignore income taxes in this problem)The management of Mazor Corporation is considering the purchase of a machine that would cost $144,144 and would have a useful life of 5 years.The machine would have no salvage value.The machine would reduce labor and other operating costs by $39,000 per year.The internal rate of return on the investment in the new machine is closest to:

Question

Quizplus · Accepted Answer

Factor of the internal rate of return = Investment required F1F1F1S1F1F1F10 Annual net cash inflow
= $144,144 F1F1F1S1F1F1F10 $39,000 = 3.696
The factor of 3.696 for 5 years represents an internal rate of return of 11%.

(Ignore Income Taxes in This Problem)The Management of Mazor Corporation