A Dutch company is planning to replace the old machine for a new one. The...
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A Dutch company is planning to replace the old machine for a new one. The new machine will cost Euro 4 million, the old one can not be sold. The new machine will be used for 20 years, then it can be sold for 25% of the original purchase price. Each year the company will save Euro 450,000 on the production costs, but the maintenance costs will be higher too: Euro 40,000 per year.
a) Calculate the Internal Rate of Return.
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