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 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? OA: 0.03 OB: 0.04 OC: 0.05 OD: 0.06 OE: 0.07 OF: 0.08 $20,000 2,860 67,790 $170,000 2,860 28,615
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 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? OA: 0.03 OB: 0.04 OC: 0.05 OD: 0.06 OE: 0.07 OF: 0.08 $20,000 2,860 67,790 $170,000 2,860 28,615
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
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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
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?
A: 0.03 OB: 0.04 Oc: 0.05 OD: 0.06 OE: 0.07 OF: 0.08
$20,000
2,860
67,790
$170,000
2,860
28,615](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa47eb71a-86b2-4c29-a952-2b7937478331%2F491904de-dea7-4901-a5df-a4706996b278%2Ffek61fr_processed.png&w=3840&q=75)
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
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?
A: 0.03 OB: 0.04 Oc: 0.05 OD: 0.06 OE: 0.07 OF: 0.08
$20,000
2,860
67,790
$170,000
2,860
28,615
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