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What is the machine internal rate of return

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Question - Chovita Motors Corp. is evaluating a machine that costs $100,000. The machine is expected to generate net income equal to $30,000, $90,000, and $50,000, respectively, during the next three years. The machine's annual depreciation expense will be $5,000, $3,000, and $2,000, respectively. In three years, the machine will have a salvage value equal to zero.

(a) What is the machine's net present value (NPV) if the Chovita's required rate of return is 10 percent?

(b) What is the machine's internal rate of return (IRR)?

Reference no: EM133050648

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