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XYZ is considering investing in a new and cooking machine at an initial cost of $100,000. After close examination of the investment proposal, the firm’s CFO has determined that the expected after-tax cash flows from this operation for the next 5 years will be as followed: Using the Internal Rate of Return Rule; 7% required internal rate of return.   Year     Cash Flow 1          $10,000 2          $40,000 3          $40,000 4          $40,000 5          $10,000

XYZ is considering investing in a new and cooking machine at an initial cost of $100,000. After close examination of the investment proposal, the firm’s CFO has determined that the expected after-tax cash flows from this operation for the next 5 years will be as followed: Using the Internal Rate of Return Rule; 7% required internal rate of return.   Year     Cash Flow 1          $10,000 2          $40,000 3          $40,000 4          $40,000 5          $10,000

Managerial Accounting: The Cornerstone of Business Decision-Making
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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XYZ is considering investing in a new and cooking machine at an initial cost of $100,000. After close examination of the investment proposal, the firm’s CFO has determined that the expected after-tax cash flows from this operation for the next 5 years will be as followed:

Using the Internal Rate of Return Rule; 7% required internal rate of return.

 

Year     Cash Flow

1          $10,000

2          $40,000

3          $40,000

4          $40,000

5          $10,000

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