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In: Accounting

Larson Company is considering the purchase of a machine with the following characteristics: Initial cost $16,000...

Larson Company is considering the purchase of a machine with the following characteristics:

Initial cost

$16,000

Useful life of the machine

6 years

Required rate of return (discount rate)

12%

Reduction in annual net cash outflows

$4,120

Residual value (at end of useful life)

$0

Calculate the IRR (internal rate of return) for this machine (investment opportunity).

  • 14%

  • 16%

  • 18%

  • 12%

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