Reference no: EM13824290
BSU Inc. wants to purchase a new machine for $40,000, excluding $1,400 of 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 $2,200, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $9,000 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a six-year period with no salvage value.
Determine the approximate internal rate of return. (Round answer to 0 decimal places, e.g. 10.)
2. Brady Service Center just purchased an automobile hoist for $32,340. The hoist has an 8-year life and an estimated salvage value of $3,310. Installation costs and freight charges were $3,602 and $880, respectively. Brady uses straight-line depreciation.
The new hoist will be used to replace mufflers and tires on automobiles. Brady estimates that the new hoist will enable his mechanics to replace 5 extra mufflers per week. Each muffler sells for $75 installed. The cost of a muffler is $37, and the labor cost to install a muffler is $17.
Compute the annual rate of return for the new hoist.
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: BSU Inc. wants to purchase a new machine for $40,000, excluding $1,400 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. Determine the approximate internal rate of re..
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