I management is considering investing in two alternative Production systems. The systems are mutually excl and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 7 percent discount rate for Production systems. Year 0 1 2 3 System 1 -$15,200 14,700 14,700 14,700 System 2 -$46,600 32,600 32,600 32,600 Compute the IRR for both production system 1 and production system 2. (Do not round intermediate calculations. Round answers decimal places, e.g. 15.25%.)
I management is considering investing in two alternative Production systems. The systems are mutually excl and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 7 percent discount rate for Production systems. Year 0 1 2 3 System 1 -$15,200 14,700 14,700 14,700 System 2 -$46,600 32,600 32,600 32,600 Compute the IRR for both production system 1 and production system 2. (Do not round intermediate calculations. Round answers decimal places, e.g. 15.25%.)
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
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