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What is the approximate internal rate of return

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Question - X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment:

Current equipment

Current sales value $16,000

Final sales value 2,570

Operating costs 66,850

New equipment

Purchase cost $166,000

Final sales value 2,570

Operating costs 34,400

The current and new equipment will last for 6 years. If X Company replaces the current equipment, what is the approximate internal rate of return?

a. 0.03

b. 0.04

c. 0.05

d.0.06

e. 0.07

f. 0.08

Reference no: EM132739118

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