Vaughn Corporation is involved in the business of injection moulding of plastics. It is considering the purchase of a new computer- aided design and manufacturing machine for $426,600. The company believes that with this new machine it will improve productivity and increase quality, resulting in a $115,400 increase in net annual cash flows for the next five years. Management requires a 13% rate of return on all new investments. Click here to view the factor table. Calculate the internal rate of return on this new machine. (Round answer to 0 decimal places, e.g. 10%. For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.52124.) Internal rate of return Should management accept the investment? The investment be accepted. %
Vaughn Corporation is involved in the business of injection moulding of plastics. It is considering the purchase of a new computer- aided design and manufacturing machine for $426,600. The company believes that with this new machine it will improve productivity and increase quality, resulting in a $115,400 increase in net annual cash flows for the next five years. Management requires a 13% rate of return on all new investments. Click here to view the factor table. Calculate the internal rate of return on this new machine. (Round answer to 0 decimal places, e.g. 10%. For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.52124.) Internal rate of return Should management accept the investment? The investment be accepted. %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Rakesh
Transcribed Image Text:Vaughn Corporation is involved in the business of injection moulding of plastics. It is considering the purchase of a new computer-
aided design and manufacturing machine for $426,600. The company believes that with this new machine it will improve productivity
and increase quality, resulting in a $115,400 increase in net annual cash flows for the next five years. Management requires a 13% rate
of return on all new investments.
Click here to view the factor table.
Calculate the internal rate of return on this new machine. (Round answer to 0 decimal places, e.g. 10%. For calculation purposes,
use 5 decimal places as displayed in the factor table provided, e.g. 1.52124.)
Internal rate of return
Should management accept the investment?
The investment
◆ be accepted.
%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education