es Problem 12-13 (Algo) Internal rate of return [LO12-4] Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $34,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 17,000 15,000 10,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return % b. With a cost of capital of 14 percent, should the equipment be purchased? No Yes

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
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Chapter12: Capital Investment Analysis
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Problem 12-13 (Algo) Internal rate of return [LO12-4]
Home Security Systems is analyzing the purchase of manufacturing equipment that
will cost $34,000. The annual cash inflows for the next three years will be:
Year
1
2
3
Cash Flow
$ 17,000
15,000
10,000
Use Appendix B and Appendix D for an approximate answer but calculate your final
answer using the financial calculator method.
a. Determine the internal rate of return.
Note: Do not round intermediate calculations. Enter your answer as a percent
rounded to 2 decimal places.
Internal rate of return
%
b. With a cost of capital of 14 percent, should the equipment be purchased?
No
Yes
Transcribed Image Text:es Problem 12-13 (Algo) Internal rate of return [LO12-4] Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $34,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 17,000 15,000 10,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return % b. With a cost of capital of 14 percent, should the equipment be purchased? No Yes
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