Compute the machines internal rate of return to the nearest

Reference no: EM13484125 , Length: 10

Allen Company's required rate of return is 14%. The company is considering the purchase of a new machine that will save $10,000 per year in cash operating costs. The machine will cost $40,000 and will have an 8-year useful life with zero salvage value. Straight-line depreciation will be used.

Required:

Compute the machine's internal rate of return to the nearest whole percent. Would you recommend purchase of the machine? Explain.

Reference no: EM13484125

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