If Dr. Smith buys a machine for $5,000 as is able to improve the earnings of her practice by $2,000 a year for five years, and then can sell the machine for $600 as scrap. What is the IRR? discount ratePresent valueIRRyear012319945amount-5.0002,0002,0002,0002,0002,6000.15PV-5,0001,7391,5121,3151.1441,293CumulativePV-5,000

Answered: If Dr. Smith buys a machine for $5,000…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If Dr. Smith buys a machine for $5,000 as is able to improve the earnings of her practice by $2,000 a year for five years, and then can sell the machine for $600 as scrap. What is the IRR?

discount rate
Present value
IRR
year
0
1
2
3
199
4
5
amount
-5.000
2,000
2,000
2,000
2,000
2,600
0.15
PV
-5,000
1,739
1,512
1,315
1.144
1,293
Cumulative
PV
-5,000

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