Exercise 182 Ace Corporation recently purchased a new machine for its factory op

Question

Exercise 182 Ace Corporation recently purchased a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $250,000 in annual cash flows for a period of five years The required rate of return is 8%. The new machine is expected to have zero salvage value at the end of the five-year period Calculate the internal rate of return Internal rate of return Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION LINK TO TEXT Question Attempts: Unlimited SAVE FOR LATER SUBIT ANSWER SUBMIT ANSWER

Explanation / Answer

Let irr be x%
At irr,present value of inflows=present value of outflows.

950000=250000/1.0x+250000/1.0x^2+250000/1.0x^3+250000/1.0x^4+250000/1.0x^5

Hence x=irr=9.91%(Approx).

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