Question

Bruno Corporation is involved in the business of injection molding of plastics. It is considering the purchase of a new computer-aided design and manufacturing machine for $428,000. The company believes that with this new machine it will improve productivity and increase quality, resulting in an increase in net annual cash flows of $98,272 for the next 6 years. Management requires a 10% rate of return on all new investments.

Click here to view the factor table.

Calculate the internal rate of return on this new machine. (Round answer to 0 decimal places, e.g. 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Internal rate of return

enter the internal rate of return in percentages rounded to 0 decimal places %

Answer 1

Year	Cash flow	× factor@ 10.00%	Present value
0	$    (428,000.00)	1.0000	$          (428,000.00)
1	$        98,272.00	0.9091	$             89,338.17
2	$        98,272.00	0.8264	$             81,216.51
3	$        98,272.00	0.7513	$             73,833.18
4	$        98,272.00	0.6830	$             67,121.06
5	$        98,272.00	0.6209	$             61,019.14
6	$        98,272.00	0.5645	$             55,471.94
NPV		4.3553	$                       0.00

NPV is 0 at 10%

IRR is 10% (using excel)

please rate.