Estimate the internal rate of return for the machine

Assignment Help Finance Basics
Reference no: EM13266831

A machine can be purchased for $10,500, including transportation charges, but installation costs will require $1,500 more. The machine is expected to last four years and produce annual cash revenues of $6,000. Annual cash operating expenses are expected to be $2,000, with depreciation of $3,000 per year. The firm has a 30 percent tax rate.

a. Determine the relevant after-tax cash flows and prepare a cash flow schedule.

b. Calculate the payback period for the machine.

c. If the project's cost of capital is 10 percent, would you recommend buying the machine?

d. Estimate the internal rate of return for the machine.


Reference no: EM13266831


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd