Determine the approximate internal rate of return

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Question - Cullumber Inc. wants to purchase a new machine for $31,420, excluding $1,300 of installation costs. The old machine was purchased 5 years ago and had an expected economic life of 10 years with no salvage value. The old machine has a book value of $2,200, and Cullumber Inc. expects to sell it for that amount. The new machine will decrease operating costs by $7,000 each year of its economic life. The straight-line depreciation method will be used for the new machine for a 6-year period with no salvage value.

Determine the cash payback period.

Determine the approximate internal rate of return.

Reference no: EM133139852

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