Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:25) The Comil Corporation recently purchased a new machine for its factory operations at a cost of
$390,875. The investment is expected to generate $125,000 in annual cash flows for a period of five
years. The required rate of return is 14%. The old machine has a remaining life of five years. The new
machine is expected to have zero value at the end of the five-year period. The disposal value of the old
machine at the time of replacement is zero. What is the internal rate of return?
A) 15%
B) 16%
C) 17%
D) 18%
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