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Cullumber, Inc. is considering purchasing equipment costing $30000 with a 6-year useful life. The equipment will...

Cullumber, Inc. is considering purchasing equipment costing $30000 with a 6-year useful life. The equipment will provide annual cost savings of $7200 and will be depreciated straight-line over its useful life with no salvage value. Cullumber requires a 10% rate of return. Present Value of an Annuity of 1

What is the approximate internal rate of return for this investment?

12%

9%

10%

11%

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Answer #1

cullumbes o 30000 52 equirmen) seful lfk nnual-cast-soving- 1200 Uage val Luo 12% appoxumat iotenol sake of setun wha is -the this investmont 2 ennual cash infou 200 is discount factor in Pacaent alue ot an annuiY Of s 1 in ameae tote sefel the lactos would e)İl@ 12% Volue is 4.111 cohich is new to 4.16C4 ( 4-111-4 1663) -0.056 ⑨ ir/ value is 4:231 lso, its mox than 11ヅ. 6ut less than £27. Hence appaoxim ale TRRIS|128

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