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X Company must decide whether to continue using its current equipment or replace it with...

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Accounting

X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment:

Current equipment
Current sales value $14,000
Final sales value 3,700
Operating costs 63,220
New equipment
Purchase cost $164,000
Final sales value 3,700
Operating costs 33,670

The current and new equipment will last for 6 years. If X Company replaces the current equipment, what is the approximate internal rate of return?

A: 0.03 B: 0.04 C: 0.05 D: 0.06 E: 0.07 F: 0.08

IDK if you need this table but just in case:

image

TTable 1: Present Value of $1.00 Table 2: Present Value of an Annuity of $1.00

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