Elgin Restaurant Supplies is analyzing the purchase of manufacturing equipment that will cost $38,000. The annual cash inflows are as follows. Use Appendix D.
Year | Cash Flow | |||
1 | $19,000 | |||
2 | 17,000 | |||
3 | 12,000 | |||
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 11 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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