Should vga textile company purchase the machine

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Reference no: EM133109597

The management of VGA Textile Company is considering to replace an old machine with a new one. The new machine will be capable of performing some tasks much faster than the old one. The installation of machine will cost $8.475 and will reduce the annual labor cost by $1,500. The useful life of the machine will be 10 years with no salvage value. The minimum required rate of return is 15%.

Required: Should VGA Textile Company purchase the machine?

Use internal rate of return (IRR) method for your conclusion.

Reference no: EM133109597

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