Analysis of a machine indicates that it has a cost of $5,375,000. The machine is expected to produce cash inflows of $1,825,000 in Year 1; $1,775,000 in Year 2; $1,630,000 in Year 3; $1,585,000 in Year 4; and $1,650,000 in Year 5. What is the machine's IRR?
A) 12.16%
B) 17.81%
C) 23.00%
D) 11.11%

Question

Quizplus · Accepted Answer

To find the IRR, we can use a financial calculator or Excel. In this case, using Excel's IRR function, we get an answer of 17.81%. Therefore, the best choice is B.

Analysis of a Machine Indicates That It Has a Cost