Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $94,000. The...
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Accounting
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $94,000. The annual cash inflows for the next three years will be:
| Year | Cash Flow | |||
| 1 | $ | 47,000 | ||
| 2 | 45,000 | |||
| 3 | 37,000 | |||
|
| ||||
Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method.
a. Determine the internal rate of return. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. With a cost of capital of 12 percent, should the equipment be purchased?
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