Determine the internal rate of return using interpolation

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Question: Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $40,000. The annual cash inflows for the next three years will be:

Year Cash Flow

1 $20,000

2 18,000

3 13,000

a. Determine the internal rate of return using interpolation.

b. With a cost of capital of 12 percent, should the machine be purchased?

Reference no: EM131788429

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