QUESTION 6-10 POINTS The management of Leipzig Corporation is considering the pu

Question

QUESTION 6-10 POINTS The management of Leipzig Corporation is considering the purchase of an automated molding machine that would cost $280,534, would have a useful life of 5 years, and would have no salvage value. The automated molding machine would result in cash savings of $74,000 per year due to lower labor and other costs. Required: Determine the internal rate of return on the investment in the new automated molding machine Please show all Computations Investment Required Net Annual Cash Flow Internal Rate of Return

Explanation / Answer

Investment required 280534 Net annual cash flow 74000 Factor 3.791 =280534/74000 Internal rate of return 10% The PV factor 3.791 for 5 years is closest to 10% which can be determined by formula (1-(1.1)^-5)/0.1

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.