X Company must decide whether to continue using its current equipment or replace it with...
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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 | $10,000 |
| Final sales value | 3,490 |
| Operating costs | 63,190 |
| New equipment | |
| Purchase cost | $160,000 |
| Final sales value | 3,490 |
| Operating costs | 33,640 |
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?
I have already tried 0.04 and 0.09 and both I now know are incorrect.
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You can see the logs in the Dashboard.