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In: Accounting

Amaro Hospital, a not-for-profit institution not subject to income taxes, is considering the purchase of new...

Amaro Hospital, a not-for-profit institution not subject to income taxes, is considering the purchase of new equipment costing $25,000 to achieve cash savings of $6,250 per year in operating costs. The estimated useful life is 10 years, with no residual value. The minimum expected return is 14%.

What is the internal rate of return(%)? (Note: Use Excel's IRR function to calculate the answer.)

Solutions

Expert Solution

Year Cash Flows
0            (25,000)
1               6,250
2               6,250
3               6,250
4               6,250
5               6,250
6               6,250
7               6,250
8               6,250
9               6,250
10               6,250
IRR 21.41%

ekkarill92 answered 2 years ago
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