Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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Question
412
Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirement below.
Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $654,842. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:
Year | Cash Revenues | Cash Expenses |
1 | $1,200,000 | $1,000,000 |
2 | 1,200,000 | 1,000,000 |
3 | 1,200,000 | 1,000,000 |
4 | 1,200,000 | 1,000,000 |
5 | 1,200,000 | 1,000,000 |
Required:
Compute the Investment's
IRR = %
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