A machine costs $52,000; it is expected to generate annual cash revenues of $16,500 and...
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Accounting
A machine costs $52,000; it is expected to generate annual cash revenues of $16,500 and annual cash expenses of $2,000 for five years. The required rate of return is 18%. Using the tables that follow, which of the following statements about the machine's internal rate of return is true?
Future Value of $1
Periods
4%
6%
8%
10%
12%
14%
16%
18%
20%
1
1.040
1.060
1.080
1.100
1.120
1.140
1.160
1.180
1.200
2
1.082
1.124
1.166
1.210
1.254
1.300
1.346
1.393
1.440
3
1.125
1.191
1.260
1.331
1.405
1.482
1.561
1.643
1.728
4
1.170
1.263
1.361
1.464
1.574
1.689
1.811
1.939
2.074
5
1.217
1.338
1.469
1.611
1.762
1.925
2.101
2.288
2.488
6
1.265
1.419
1.587
1.772
1.974
2.195
2.437
2.700
2.986
7
1.316
1.504
1.714
1.949
2.211
2.502
2.827
3.186
3.583
8
1.369
1.594
1.851
2.144
2.476
2.853
3.279
3.759
4.300
9
1.423
1.690
1.999
2.359
2.773
3.252
3.803
4.436
5.160
10
1.480
1.791
2.159
2.594
3.106
3.707
4.412
5.234
6.192
Future Value of a Series of $1 Cash Flows
Periods
4%
6%
8%
10%
12%
14%
16%
18%
20%
1
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
2
2.040
2.060
2.080
2.100
2.120
2.140
2.160
2.180
2.220
3
3.122
3.184
3.246
3.310
3.374
3.440
3.506
3.572
3.640
4
4.247
4.375
4.506
4.641
4.779
4.921
5.067
5.215
5.368
5
5.416
5.637
5.867
6.105
6.353
6.610
6.877
7.154
7.442
6
6.633
6.975
7.336
7.716
8.115
8.536
8.977
9.442
9.930
7
7.898
8.394
8.923
9.487
10.089
10.730
11.414
12.142
12.916
8
9.214
9.898
10.637
11.436
12.300
13.233
14.240
15.327
16.499
9
10.583
11.491
12.488
13.580
14.776
16.085
17.519
19.086
20.799
10
12.006
13.181
14.487
15.938
17.549
19.337
21.321
23.521
25.959
Present Value of $1
Periods
4%
6%
8%
10%
12%
14%
16%
18%
20%
1
0.962
0.943
0.926
0.909
0.893
0.877
0.862
0.847
0.833
2
0.925
0.890
0.857
0.826
0.797
0.769
0.743
0.718
0.694
3
0.889
0.840
0.794
0.751
0.712
0.675
0.641
0.609
0.579
4
0.855
0.792
0.735
0.683
0.636
0.592
0.552
0.516
0.482
5
0.822
0.747
0.681
0.621
0.567
0.519
0.476
0.437
0.402
6
0.790
0.705
0.630
0.564
0.507
0.456
0.410
0.370
0.335
7
0.760
0.665
0.583
0.513
0.452
0.400
0.354
0.314
0.279
8
0.731
0.627
0.540
0.467
0.404
0.351
0.305
0.266
0.233
9
0.703
0.592
0.500
0.424
0.361
0.308
0.263
0.225
0.194
10
0.676
0.558
0.463
0.386
0.322
0.270
0.227
0.191
0.162
Present Value of a Series of $1 Cash Flows
Periods
4%
6%
8%
10%
12%
14%
16%
18%
20%
1
0.962
0.943
0.926
0.909
0.893
0.877
0.862
0.847
0.833
2
1.886
1.833
1.783
1.736
1.690
1.647
1.605
1.566
1.528
3
2.775
2.673
2.577
2.487
2.402
2.322
2.246
2.174
2.106
4
3.630
3.465
3.312
3.170
3.037
2.914
2.798
2.690
2.589
5
4.452
4.212
3.993
3.791
3.605
3.433
3.274
3.127
2.991
6
5.242
4.917
4.623
4.355
4.111
3.889
3.685
3.498
3.326
7
6.002
5.582
5.206
4.868
4.564
4.288
4.039
3.812
3.605
8
6.733
6.210
5.747
5.335
4.968
4.639
4.344
4.078
3.837
9
7.435
6.802
6.247
5.759
5.328
4.946
4.607
4.303
4.031
10
8.111
7.360
6.710
6.145
5.650
5.216
4.833
4.494
4.192
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