Pendleton Parks is investigating the purchase of new maintenance equipment. The equipment would cost $5,000...
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Accounting
Pendleton Parks is investigating the purchase of new maintenance equipment. The equipment would cost $5,000 and have a five year life. It would save $500 per year in cash operating costs. In addition, because it would enhance the attractiveness of various parks and facilities, management estimates there would be an average of 1,000 additional paying visitors per year. The average contribution margin realized per visitor is $1.
The approximate internal rate of return promised by this investment = _________%
Please explain and use formula for IRR
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