310chapter16m7

Calculate the irr factor initial investment annual

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Unformatted text preview: late the IRR 2-step process: 1. Calculate the IRR Factor = Initial Investment ÷ Annual Cash Inflows 2. Use the IRR Factor and the present value of an annuity table to determine the IRR Chapter 16 Module 7: IRR • Decker Company can purchase a new Decker Company can purchase a new machine at a cost of $104,320 that will machine at a cost of $104,320 that will save $20,000 per year in cash operating save $20,000 per year in cash operating costs. costs. • The machine has a 10-year life. The machine has a 10-year life. • • Calculate the IRR on the new machine Calculate the IRR on the new machine If Decker Company has a 15% cost of If Decker Company has a 15% cost of capital should the new machine be c...
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