Use trial and error to approximate internal rate of return

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Reference no: EM131292069

Internal Rate of Return Analysis. Heston Farming Company would like to purchase a harvesting machine for $100,000. The machine is expected to have a life of 4 years, and a salvage value of $20,000. Annual maintenance costs will total $28,000. Annual savings are predicted to be $60,000. The company’s required rate of return is 11 percent (this is the same data as the previous exercise).

Required:

Use trial and error to approximate the internal rate of return for this investment proposal.

Should the company purchase the harvesting machine? Explain.

Reference no: EM131292069

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