Campbell Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce...
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Accounting
Campbell Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the companys cash outflow for operating expenses by $1,270,000 per year. The cost of the equipment is $6,766,877.50. Campbell expects it to have a 9-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 15 percent and uses the straight-line method for depreciation. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)
Required
A) Calculate the internal rate of return of the investment opportunity. (Do not round intermediate calculations.)
B) Indicate whether the investment opportunity should be accepted.
a: internal rate of return: ___________%
b: Should the investment opportunity be accepted?________ (accepted or rejected)
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