Question
Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and...
Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.80 million and create incremental cash flows of $438,206.00 each year for the next five years. The cost of capital is 10.59%. What is the internal rate of return for the J-Mix 2000? unanswered not submitted Submit Attempts Remaining: Infinity Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
Answers
Let irr be x%
At irr,present value of inflows=present value of outflows.1,800,000=438206/1.0x+438206/1.0x^2+438206/1.0x^3+438206/1.0x^4+438206/1.0x^5
Hence x=irr=6.93%(Approx).
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