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Elgin Restaurant Supplies is analyzing the purchase of manufacturing equipment that will cost $41,000. The annual...

Elgin Restaurant Supplies is analyzing the purchase of manufacturing equipment that will cost $41,000. The annual cash inflows are as follows. Use Appendix D.

Year Cash Flow    
1 $20,000
2 19,000
3 16,500

a. Determine the IRR using interpolation. (Round the intermediate calculations to the nearest whole dollar. Round the final answer to 2 decimal places.)

IRR          %

b. With a cost of capital of 16 percent, should the machine be purchased?

  • Yes

  • No

c. With information from part b, compute the PI. (Round the final answer to 3 decimal places.)

PI            

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jeff jeffy answered 1 year ago
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