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Estimating the machine will generate cash inflows

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Reference no: EM131318419

Corporation Y needs to purchase a new machine costing $2.08 million. Management is estimating the machine will generate cash inflows of $396,000 for two years and $300,000 for the following seven years. If management requires a minimum 8 percent rate of return, should the firm purchase this particular machine? Why or why not?

A. no; because the IRR is 7.57 percent
B. yes; because the IRR is 8.47 percent
C. no; because the IRR is .68 percent
D. yes; because the IRR is 10.38 percent

Reference no: EM131318419

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