What is the pizza ovens internal rate of return

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Question - Wood?re Pizzeria is considering acquiring a new pizza oven. The pizza oven would cost $125,080, including installation and shippping. Woodfire estimated the new pizza oven would increase the company's cash inflows, net of expenses, by $40,000 per year. The pizza oven would have a five-year useful life and no salvage value.

Required -

1. What is the pizza oven's internal rate of return?

2. Using a discount rate of18%, what is the pizza oven's net present value?

3. Suppose the new pizza oven would increase the company's annual cash inflows, net of expenses, by only $34,700 per year. Under these conditions, what is the internal rate of return?

Reference no: EM133156568

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