The Valentine Company has decided to buy a machine costing $24,730. Estimated ca
ID: 2361481 • Letter: T
Question
The Valentine Company has decided to buy a machine costing $24,730. Estimated cash savings from using the new machine amount to $5,000 per year. The machine will have no salvage value at the end of its useful life of nine years. (Ignore income taxes.)
If Valentine's required rate of return is 8%, the machine's internal rate of return is closest to: (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate.)
The Valentine Company has decided to buy a machine costing $24,730. Estimated cash savings from using the new machine amount to $5,000 per year. The machine will have no salvage value at the end of its useful life of nine years. (Ignore income taxes.)
Click here to view Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.
If Valentine's required rate of return is 8%, the machine's internal rate of return is closest to: (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate.)
Explanation / Answer
12%
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