Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $598,122. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $1,500,000 $1,300,000 2 1,500,000 1,300,000 3 1,500,000 1,300,000 4 1,500,000 1,300,000 5 1,500,000 1,300,000 Required: Compute the Investment's Internal Rate of return. Enter as a percent. If required, round your answer to the nearest whole percent. IRR = fill in the blank, %
Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $598,122. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $1,500,000 $1,300,000 2 1,500,000 1,300,000 3 1,500,000 1,300,000 4 1,500,000 1,300,000 5 1,500,000 1,300,000 Required: Compute the Investment's Internal Rate of return. Enter as a percent. If required, round your answer to the nearest whole percent. IRR = fill in the blank, %
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 10E: Roberts Company is considering an investment in equipment that is capable of producing more...
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Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $598,122. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:
| Year | Cash Revenues | Cash Expenses |
| 1 | $1,500,000 | $1,300,000 |
| 2 | 1,500,000 | 1,300,000 |
| 3 | 1,500,000 | 1,300,000 |
| 4 | 1,500,000 | 1,300,000 |
| 5 | 1,500,000 | 1,300,000 |
Required:
Compute the Investment's
IRR = fill in the blank, %
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