"T.Z.Y. Life Fitness is considering installing a new process machine for the firm's manufacturing facility. The machine costs $457,000 installed, will generate additional revenue of $78,000 per year, and will save $67,000 per year in labor and material costs. The machine will be financed by a $180,000 bank loan repayable in three equal annual installments with a 4% interest rate. The machine will be depreciated using seven-year MACRS. The useful life of the machine is 10 years when the machine will be sold for $23,000. The marginal tax rate is 21%. Compute the IRR of the investment. Enter your answer as a percentage rounded to the nearest tenth of a percent (i.e., enter 8.3% as 8.3)"
"T.Z.Y. Life Fitness is considering installing a new process machine for the firm's manufacturing facility. The machine costs $457,000 installed, will generate additional revenue of $78,000 per year, and will save $67,000 per year in labor and material costs. The machine will be financed by a $180,000 bank loan repayable in three equal annual installments with a 4% interest rate. The machine will be depreciated using seven-year MACRS. The useful life of the machine is 10 years when the machine will be sold for $23,000. The marginal tax rate is 21%. Compute the IRR of the investment. Enter your answer as a percentage rounded to the nearest tenth of a percent (i.e., enter 8.3% as 8.3)"
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
!["T.Z.Y. Life Fitness is considering installing a new process machine for the firm's
manufacturing facility. The machine costs $457,000 installed, will generate additional
revenue of $78,000 per year, and will save $67,000 per year in labor and material
costs. The machine will be financed by a $180,000 bank loan repayable in three equal
annual installments with a 4% interest rate. The machine will be depreciated using
seven-year MACRS. The useful life of the machine is 10 years when the machine will
be sold for $23,000. The marginal tax rate is 21%. Compute the IRR of the investment.
Enter your answer as a percentage rounded to the nearest tenth of a percent (i.e.,
enter 8.3% as 8.3)"
red
swers
30.6 (with margin: 0.300000000000002)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcd574c39-83f7-44d4-bc6a-ea87e2e8df07%2F7fd598df-0054-4bfb-adf3-40a955b37b2a%2Fq8m1s3q8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:"T.Z.Y. Life Fitness is considering installing a new process machine for the firm's
manufacturing facility. The machine costs $457,000 installed, will generate additional
revenue of $78,000 per year, and will save $67,000 per year in labor and material
costs. The machine will be financed by a $180,000 bank loan repayable in three equal
annual installments with a 4% interest rate. The machine will be depreciated using
seven-year MACRS. The useful life of the machine is 10 years when the machine will
be sold for $23,000. The marginal tax rate is 21%. Compute the IRR of the investment.
Enter your answer as a percentage rounded to the nearest tenth of a percent (i.e.,
enter 8.3% as 8.3)"
red
swers
30.6 (with margin: 0.300000000000002)
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 6 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Foundations Of Finance](https://www.bartleby.com/isbn_cover_images/9780134897264/9780134897264_smallCoverImage.gif)
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
![Fundamentals of Financial Management (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781337395250/9781337395250_smallCoverImage.gif)
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
![Corporate Finance (The Mcgraw-hill/Irwin Series i…](https://www.bartleby.com/isbn_cover_images/9780077861759/9780077861759_smallCoverImage.gif)
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education