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X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment: Current equipment Current sales value Final sales value Operating costs New equipment Purchase cost Final sales value Operating cost savings $20,000 2,720 65,450 $170,000 2,720 27,690 The current and new equipment will last for 6 years. If X Company replaces the current equipment, what is the approximate internal rate of return?

X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment: Current equipment Current sales value Final sales value Operating costs New equipment Purchase cost Final sales value Operating cost savings $20,000 2,720 65,450 $170,000 2,720 27,690 The current and new equipment will last for 6 years. If X Company replaces the current equipment, what is the approximate internal rate of return?

Essentials Of Investments
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
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X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment: Current equipment Current sales value Final sales value Operating costs New equipment Purchase cost Final sales value Operating cost savings $20,000 2,720 65,450 $170,000 2,720 27,690 The current and new equipment will last for 6 years. If X Company replaces the current equipment, what is the approximate internal rate of return?
Transcribed Image Text:X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment: Current equipment Current sales value Final sales value Operating costs New equipment Purchase cost Final sales value Operating cost savings $20,000 2,720 65,450 $170,000 2,720 27,690 The current and new equipment will last for 6 years. If X Company replaces the current equipment, what is the approximate internal rate of return?
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