In: Accounting
The owner of Ongwedi Enterprises was approached by a local dealer in air conditioning units. The dealer proposed replacing the old cooling system of Ongwedi Enterprises with a modern, more efficient system. The cost of the new system was quoted at R300 000, but it would save R62 000 per year in electricity costs. The estimated life of the new system is 10 years, with no salvage value expected. All capital projects are required to earn at least the firm’s cost of capital, which is 12%.
Calculate the project’s Internal Rate of Return (IRR). (Round off your answer to two decimal places. (5)