What is the irr of machine a

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Market rate is 10%. The Orange Inc. has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the next 8 years. Orange can pick only machine A or machine B but not both. Machine A costs $10 million (year zero) and would provide cash inflows of $2.46 million per year for 8 years, beginning at year 1. With an identical timeline, Machine B costs $15 million and would provide cash inflows of $3.5 million per year for 8 years.

Problem a) What is the IRR of machine A?

Problem b) What is the IRR of machine B?

Problem c) Which one would you choose?

Reference no: EM132964570

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