(Ignore income taxes in this problem.) Crockin Corporation is considering a machine that will save $8,000 a year in cash operating costs each year for the next six years. At the end of six years it would have no salvage value. If this machine costs $33,848 now, the machine's internal rate of return is closest to:

Question

Quizplus · Accepted Answer

To find the internal rate of return, we need to calculate the discount rate at which the present value of the future savings equals the cost of the machine. Using a financial calculator or Excel, we can find that the internal rate of return is 11.03%. Therefore, the closest answer is C) 11%.

(Ignore Income Taxes in This Problem