John Deere is an American manufacturer of agricultural, construction, and forestry machinery. The company is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $102,400. The equipment will have an initial cost of $403,600 and have a 5-year life. The salvage value of the equipment is estimated to be $77,400. If the discount rate is 10%, what is the internal rate of return? (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables. Round your final answer to the nearest dollar amount.) Multiple Choice Between 12% and 14% Between 8% and 10% Between 10% and 12% Between 6% and 8%
John Deere is an American manufacturer of agricultural, construction, and forestry machinery. The company is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $102,400. The equipment will have an initial cost of $403,600 and have a 5-year life. The salvage value of the equipment is estimated to be $77,400. If the discount rate is 10%, what is the internal rate of return? (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables. Round your final answer to the nearest dollar amount.) Multiple Choice Between 12% and 14% Between 8% and 10% Between 10% and 12% Between 6% and 8%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:John Deere is an American manufacturer of agricultural, construction, and forestry machinery. The company is considering the purchase of a new piece of
equipment. The cost savings from the equipment would result in an annual increase in cash flow of $102,400. The equipment will have an initial cost of
$403,600 and have a 5-year life. The salvage value of the equipment is estimated to be $77,400. If the discount rate is 10%, what is the internal rate of
return? (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables.
Round your final answer to the nearest dollar amount.)
Multiple Choice
Between 12% and 14%
Between 8% and 10%
Between 10% and 12%
Between 6% and 8%
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