Calculate the annual rate of return for algs ltd

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Reference no: EM132961158

ALGS Ltd. wants to purchase a new machine for $29,300, excluding $1,600 in installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,000 and ALGS Ltd. expects to sell it for that amount. The new machine would decrease operating costs by $8,200 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a five-year period with no salvage value.

Problem 1: Calculate the annual rate of return. (Round answer to 3 decimal paces, e.g. 12.512%.)

Reference no: EM132961158

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